Budget and appropriation debate soon to take center stage as legislature enters final act- In Governor Bill Lee's State of the State, he proposed a number of significant tax and budget proposals impacting the business community.
Overall, the Chamber and business community has applauded the effort especially with regard to cutting taxes on Tennessee’s business tax and Franchise & Excise tax as well as proposals that eliminate certain taxes on manufacturing distribution facilities.
The Single Sales Factor, (SSF) component of Governor Lee’s TN Works Tax Act has been the focal point of discussion. Some companies have noted that mandatory SSF results in tax decreases for some and tax increases for others depending on the specific sector and Tennessee operations. The Chamber has formally requested that companies be allowed to extend beyond 15 years the ability to use F&E tax credits if required to use SSF. The Chamber also has encouraged additional Excise rate reduction to counter any tax increases and accommodations for certain industry sectors in the proposal.
Also notable to business, the TN Tax Works Act includes $275M reduction from the bonus depreciation measures and $114M reduction from the paid family leave tax credit as well as a three-month sales tax holiday. Businesses could see a net revenue reduction of $83M and out of state businesses could see a net revenue increase of $302M producing a significant incentive for businesses to locate larger operations here.
