Tennessee Laws and Incentives
Listed below are the summaries of all current Tennessee laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:
State Incentives
Tennessee's National Electric Vehicle Infrastructure (NEVI) Planning
The U.S. Department of Transportation’s (DOT) NEVI Formula Program requires the Tennessee Department of Transportation (TDOT) to submit an annual EV Infrastructure Deployment Plan (Plan) to the DOT and U.S. Department of Energy (DOE) Joint Office of Energy and Transportation (Joint Office), describing how the state intends to distribute NEVI funds. The submitted plans must be established according to NEVI guidance.
For more information about Tennessee’s NEVI planning process, see the TDOT Plan website. To review Tennessee’s NEVI plan, see the Joint Office State Plans for EV Charging website.
Vehicle Emissions Reduction and Electric Vehicle (EV) Charging Station Project Funding
The Tennessee Department of Environment and Conservation (TDEC) provides funding for the repower or replacement of Class 4-8 school, shuttle and transit buses, Class 4-7 local freight trucks, and Class 8 local freight trucks and port drayage trucks, with alternative fuel or all-electric models. Alternative fuels include, but are not limited to, compressed natural gas, propane, and hybrid electric technologies. TDEC also provides funding for light-duty EV charging infrastructure. Private, public, and non-profit organizations, including state, local, and tribal governments, are eligible for funding.
In partnership with the Tennessee Valley Authority (TVA), TDEC also provides funding for the Fast Charge TN Network, which supports the deployment of direct current (DC) fast charging stations. Eligible applicants include TVA-served Local Power Companies whose service territory is located along corridors.
The grant programs are funded in part by Tennessee’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including funding availability, see the TDEC Project Solicitations and Fast Charge TN Network websites.
Natural Gas Station Property Tax Reduction
Any public utility, commercial, or industrial property certified to fuel natural gas vehicles may not be valued for property tax purposes at more than 30% of its total installed cost. The Tennessee Department of Environment and Conservation must certify that the station uses compressed or liquefied natural gas for the purpose of fueling motor vehicles and displaces more than 6,000 gallons of petroleum annually.
(Reference Tennessee Code 67-5-601 and 67-4-2004)
Methanol Tax Exemption
Methanol sold for use as a motor fuel that is not blended with gasoline, diesel, other fuels, or petroleum products is exempt from gasoline and diesel fuel use taxes.
(Reference Tennessee Code 67-3-419)
Idle Reduction Weight Exemption
Any motor vehicle equipped with qualified idle reduction technology or other emissions reduction technology may exceed the state gross or axle weight limits, by 550 pounds or the maximum amount allowed by federal law, whichever is greater, to account for the weight of the technology. The additional weight may not exceed the weight of the idle reduction unit. The vehicle operator must also be able to demonstrate that the technology is fully functional.
(Reference Tennessee Code 55-7-203)
Natural Gas Vehicle (NGV) and Electric Vehicle (EV) Weight Exemption
NGVs and EVs may exceed the state’s gross and axle vehicle weight limits by up to 2,000 pounds (lbs.). The NGV and EV maximum gross vehicle weight may not exceed 82,000 lbs. This exemption applies on all interstate highways.
(Reference Tennessee Code 55-7-203)
Utility / Private Incentives
Electric Vehicle (EV) Charging Station Rebate – Tennessee Valley Authority (TVA)
The Tennessee Department of Environment and Conservation and TVA will establish and fund a network of direct current fast charging (DCFC) stations every 50 miles along Tennessee’s interstates and major highways through the Fast Charge TN Network Program (Program). The Program offers rebates for public DCFC stations along EV corridor gaps, up to $150,000 per DCFC station. Eligible applicants include TVA Local Power Companies, and eligible projects must include two to four DCFC ports per location. Program participants must identify suitable host sites and agree to own, operate, and maintain Program-funded DCFC stations for a minimum of five years. For more information, including guidelines and additional eligibility requirements, see the TVA Fast Charge TN Network website.
Electric Vehicle (EV) Infrastructure Support
Tennessee utilities joined the National Electric Highway Coalition (NEHC), committing to create a network of direct current fast charging (DCFC) stations connecting major highway systems from the Atlantic Coast to the Pacific of the United States. NEHC utility members agree to ensure efficient and effective fast charging deployment plans that enable long distance EV travel, avoiding duplication among coalition utilities, and complement existing corridor DCFC sites. For more information, including a list of participating utilities and states, see the NEHC website.
Laws and Regulations
Electric Vehicle (EV) Fee
In addition to standard registration fees, EV owners must pay an annual fee of $100. Annual EV registration fees increase according to the following schedule:
| Years | Annual EV Fee |
|---|---|
| 2024 to 2026 | $200 |
| 2027 | $274 |
| 2028 and later | $274, adjusted for annual inflation |
In addition to standard registration fees, hybrid electric vehicle (HEV) and plug-in hybrid electric vehicle (PHEV) owners will be subject to the following annual fees:
| Years | Annual HEV and PHEV Fee |
|---|---|
| 2024 to 2028 | $100 |
| 2028 and later | $100, adjusted for annual inflation |
Low-speed and medium-speed vehicles are exempt from the fee.
(Reference Tennessee Code 55-4-116)
Alternative Fuel Tax
Compressed natural gas (CNG) and liquefied gas used for operating motor vehicles on public highways are subject to excise tax of $0.21 and $0.22, respectively, imposed on a per gallon basis. For the purposes of this tax, the Tennessee Department of Revenue uses a CNG gallon equivalent factor of 5.66 pounds (lbs.) and a liquefied gas gallon equivalent factor of 6.06 lbs. Liquefied gas includes combustible gas that exists in the gaseous state at 60 degrees Fahrenheit and at a pressure of 14.7 lbs. per square inch, but does not include gasoline, diesel fuel, or CNG. Government agencies are exempt from this tax.
(Reference Tennessee Code 67-3-1101 to 67-3-1102 and 67-3-1113)
Autonomous Vehicle (AV) Operation Authorization
AVs may operate on public roads without a driver present in the vehicle if the AV meets the following requirements:
- It complies with all applicable Federal Motor Vehicle Safety Standards;
- It is capable of reaching a reasonably safe state in the event that the automated driving system fails; and
- It is registered in the state as an AV that can operate without any supervision by a driver
An AV is defined as any vehicle that is equipped with a technology that has the capability to operate the vehicle without the direct control of the driver.
(Reference Tennessee Code 55-8-202)
Natural Gas Measurement
Compressed natural gas (CNG) and liquefied natural gas (LNG) used for transportation must be sold in gasoline gallon equivalents (GGE) or diesel gallon equivalents (DGE) prescribed by the state, unless equivalent measures are established by the National Conference on Weights and Measures. According to current state law, one GGE is equal to 5.66 pounds (lbs.) of CNG. One DGE is equal to 6.06 lbs. of LNG.
(Reference Tennessee Code 47-26-914)
Utility District Natural Gas Fueling Station Regulation
Utility districts may own and operate natural gas fueling stations if the operation of the station is not franchised to another entity. This regulation does not prohibit private companies from owning or operating natural gas fueling stations within a utility district service area.
(Reference Tennessee Code 7-82-302)
Biofuel Blending Contract Regulation
Any provision in a contract between a fuel wholesaler and a refiner or supplier that limits or restricts the wholesaler’s ability to blend petroleum products with ethanol or biodiesel is null and void.
(Reference Tennessee Code 47-25-2004)
Public Utility Definition
Electric vehicle (EV) chargers that provide electricity exclusively for EVs are not considered public utilities within the Tennessee Valley Authority (TVA) service area. EV chargers located outside of TVA’s territory may be subject to different regulations. For more information, see the TVA EnergyRight website.
Supply of Petroleum Products for Blending with Biofuels
Petroleum product refiners and suppliers must make all grades of gasoline and diesel fuel available to any wholesaler in a condition that allows for the fuel to be blended with ethanol or other bio-based products and must be sold in Tennessee. In addition, gasoline products must be available with detergent additives in concentrations such that after the addition of ethanol, the final product meets or exceeds the lowest additive concentrations that the U.S. Environmental Protection Agency requires.
(Reference Tennessee Code 47-25-2003)
Ethanol Blend Specifications
Ethanol-blended gasoline sold in the state must meet ASTM Standard D4814.
(Reference Tennessee Code 47-18-1304)
Biodiesel and Ethanol Definitions and Retail Requirements
Commercial biodiesel stock used for biodiesel blends must be at least 99% biodiesel (no more than 1% diesel fuel) and meet ASTM Standard D6751. Biodiesel blends must meet ASTM Standard D975. Biodiesel blends made available for public use at retail locations may not exceed 20% biodiesel (B20), and biodiesel blends containing more than 5% biodiesel (B5) must be labeled as a biodiesel blend at the pump.
Ethanol is defined as nominally anhydrous ethyl alcohol that meets ASTM Standard D4806. Ethanol blends made available for public use at a retail location must be labeled accordingly (e.g., E85).
(Reference Rules of the Tennessee Department of Agriculture 0080-5-12-.01, 0080-5-12-.02, and 0080-5-12-.03)
Alternative Fuel and Fuel-Efficient Vehicle Acquisition and Use Requirements
The Tennessee Department of General Services must ensure that at least 25% of newly purchased passenger motor vehicles procured for use in areas designated as ozone nonattainment areas are all-electric vehicles (EVs), hybrid electric vehicles (HEVs), natural gas vehicles (NGVs), or propane powered vehicles, provided that such vehicles are available at the time of procurement. If these vehicles are not available, conventional gasoline vehicles achieving an average fuel economy of at least 25 miles per gallon (mpg) may satisfy the requirement. In areas not designated as ozone nonattainment areas, at least 25% of newly purchased passenger motor vehicles must be EVs, HEVs, NGVs, propane powered vehicles, or conventional gasoline vehicles achieving an average fuel economy of at least 25 mpg. For non-passenger vehicles, state fleets must make a reasonable effort to purchase at least 5% of these vehicles as natural gas or propane vehicles.
State fleets must make every effort to ensure that 100% of newly purchased motor vehicles are energy-efficient vehicles. Energy-efficient vehicles are defined as passenger vehicles that use alternative fuels, as defined by the Energy Policy Act of 1992; HEVs; conventional gasoline vehicles achieving an average fuel economy of at least 25 mpg; or vehicles powered by ultra-low sulfur diesel achieving an average fuel economy of at least 30 mpg. Additionally, state agencies should use ethanol and biodiesel in appropriate state-owned vehicles whenever possible and support the development of biofuels fueling infrastructure.
The Tennessee Department of General Services must inventory the state’s passenger vehicle fleet and prepare annual progress reports that outline the fleet’s cost savings, pollution avoidance, and petroleum displacement.
(Reference Tennessee Code 4-3-1109)
Biofuel Quality Inspection and Testing
The Tennessee Department of Agriculture may inspect and test ethanol and methanol under the Kerosene and Motor Fuels Quality Inspection Act of 1989.
(Reference Tennessee Code 47-18-1306 and 54-1-136)
Propane and Natural Gas Liability Immunity
An individual or entity that supplies, handles, transports, or sells propane or natural gas at a retail station is immune from civil liability if incorrect use of the fueling equipment causes injury or damage. To be immune, the fuel provider must exercise reasonable care of the equipment and take reasonable steps to warn the customer of the hazards associated with misuse of the equipment.
(Reference Tennessee Code 29-34-202 and 29-34-207)
Compressed Natural Gas (CNG) Permit
CNG dealers must apply for and obtain a permit from the Tennessee Department of Revenue (Department). The permit authorizes the dealer to collect and remit taxes on CNG delivered to motor vehicles by means of a dispenser with meter capability. The permit will remain valid as long as the dealer provides timely reports and remits taxes when due, or until surrendered or cancelled. All CNG meters and dispensers are subject to inspection and verification by the Tennessee Department of Agriculture’s Weights and Measures enforcement provisions.
A CNG vehicle user must apply for and obtain a CNG user’s permit from the Department unless the user purchases CNG from a dealer through a metered dispenser.
For more information, see the Department’s CNG Tax Return for Dealers fact sheet and the Motor Fuel Taxes website.
(Reference Tennessee Code 67-3-1119 and 67-3-1120)
Low- and Medium-Speed Vehicle Access to Roadways
A low-speed vehicle is any four-wheeled electric vehicle, excluding golf carts, that achieves speeds of at least 20 miles per hour (mph) but not more than 25 mph. Low-speed vehicles may access roadways with speed limits of up to 35 mph. A medium-speed vehicle is any four-wheeled electric or gasoline vehicle that has a maximum speed of over 30 mph, but not more than 35 mph. Medium-speed vehicles may not operate on interstate highways or on any road or street that has a posted speed limit greater than 40 mph. Low- and medium-speed vehicles must comply with the safety standards in Title 49 of the Code of Federal Regulations, section 571.500.
(Reference Tennessee Code 55-8-101 and 55-8-191)