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$813.5 Million Franchise Tax Refund Reduction: Tennessee House, Mandatory Disclosure and Fiscal Realignment Drive Policy

(PHOTO: Gatherum Goss & Assoc)

Mandatory Disclosure: Businesses that will be reimbursed $813.5 million need to be listed on the Economic Department’s website

Tax credits must be used by businesses to offset return amounts, which lessens the fiscal impact

Significant changes have been made to Tennessee’s House Bill 1893, which seeks to repeal and refund the state’s franchise tax. This is a noteworthy development that represents a critical turning point in fiscal policy. The modified measure requires the corporations that will benefit from the $813.5 million refund to be identified and disclosed on the Tennessee Department of Economic and Community Development’s website. Additionally, these companies must use any department tax credits to balance the refund amount. Although the tax is constitutionally acceptable, Representative William Lamberth said the bill’s cost has been purposefully reduced, below the Senate’s estimated $1.55 billion fiscal note.

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$813.5 Million Franchise Tax Refund Reduction: Tennessee House, Mandatory Disclosure and Fiscal Realignment Drive Policy (PHOTO: Haley & Olson)

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Governor Bill Lee’s legislation reallocates monies in the face of expected declines in tax collection, indicating proactive fiscal management

As stated in the article of  The Center Square, The Tennessee Department of Revenue‘s report, which reveals significant tax credits carried over from the previous fiscal year, contrasts with the Economic Development Department’s discretion in divulging specific corporations and their tax credits during talks of the fiscal ramifications. Notably, the state’s dedication to encouraging company expansion is demonstrated by $830 million in credits for industrial machinery and $252 million in credits for employment creation. In light of these policy changes, Governor Bill Lee‘s budget amendment, which transfers $351.7 million from the current budget to the franchise tax return fund, demonstrates a proactive approach to managing fiscal balances. Tennessee’s fiscal picture is about to change, as the measure projects a significant drop in tax collections in the current fiscal year, combined with continuing corporate refunds through February 3, 2025.

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