Preview of the 2026 Legislative Session: Budget, Transportation and Tax Cuts
By State Senator Page Walley
Our Tennessee General Assembly convened on January 13, 2026, to begin the second year of the 114th General Assembly. As lawmakers return to Nashville, we do so with a shared goal: ensuring state government remains fiscally responsible, responsive to citizens, and focused on building a strong future for Tennessee.
Each legislative session brings new ideas, thoughtful debate, and important decisions. I look forward to working with my colleagues to advance policies that serve our district and strengthen our state. As always, I welcome your input and encourage you to reach out with your thoughts, questions, or concerns as the session gets underway.
Budget and Economy
The General Assembly’s most important responsibility—and its only constitutional duty—is to pass a balanced budget. That process begins with revenue projections from the State Funding Board, which estimates how much growth the state can expect in the upcoming fiscal year.
For the third year in a row, revenue growth is expected to be slower than in recent years, with projections of 2.25% to 2.35% for Fiscal Year 2026–27. While this is more modest than past growth, Tennessee’s economy continues to outperform the national average in several key areas.
The state’s seasonally adjusted unemployment rate held steady at 3.6% in September, reflecting a strong labor market. Tennessee also saw a record 20,917 new business filings in the third quarter of this year—an increase of nearly 15% compared to the same period last year.
According to the University of Tennessee’s Boyd Center for Business and Economic Research, the state’s inflation-adjusted gross domestic product is projected to grow by 2% next year. While job growth has slowed compared to previous years, Tennessee is still expected to add more than 31,000 jobs in 2026.
To prepare for future economic uncertainty, we have continued strengthening the state’s Rainy Day Fund. In 2024, the General Assembly added $35.6 million, bringing the fund to a record $2.2 billion. This long-term planning helps ensure Tennessee remains financially stable during economic downturns.
Transportation & Infrastructure
Our Senate Transportation Committee is expected to focus on long-term infrastructure funding and the state’s growing transportation needs. We will review findings from a Tennessee Advisory Commission on Intergovernmental Relations (TACIR) study examining transportation funding options, as well as receive updates from the Tennessee Department of Transportation on implementation of the Transportation Modernization Act.
Improving our roads is the number one issue I get calls about from our constituents, so Transportation funding is a priority to me. I have legislation which I will propose to provide more resources to get our roads repaired more rapidly. Broader discussions in our General Assembly will also include improving road safety, addressing homeland security concerns, and evaluating requests to expand highway patrol staffing to strengthen traffic enforcement and public safety across the state.
Tax Relief
Tennessee’s AAA credit rating and low debt levels reflect decades of careful fiscal management. As a member of the Senate Finance Committee, my colleagues and I have consistently worked to reduce the tax burden on families and small businesses while maintaining essential services.
Tax relief will once again be a topic of discussion during the 2026 session. One area of focus may be the state’s grocery sales tax, which has already been reduced by nearly 30% since 2007.
Since 2011, we have enacted more than $8.2 billion in tax cuts. These policies have helped attract new investment, support job creation, and allow Tennesseans to keep more of their hard-earned money.
This is just the beginning of the conversation. In the weeks ahead, I will share more about other policy issues the legislature will consider this session. I appreciate the opportunity to represent our district and look forward to keeping you informed as our work continues. Please reach out to me with any comments, questions or concerns at 615-741-2386 or sen.page.walley@capitol.tn.gov.
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