Tennessee Governor Bill Lee recently unveiled his proposed budget for the upcoming fiscal year, which includes several tax incentives for entrepreneurs and families. These proposals are designed to provide a measure of fiscal relief for Tennessee families and businesses, while also promoting job creation and economic growth in the state. It is important to note that these incentives will most likely be tweaked during the legislative session and are not final until the budget is approved by the state House and Senate. It does provide insight into what could be passed in the budget later this year.
- A sales tax holiday on food from August 1 to October 31, 2023.
- Begin a three-year transition to Single Sales Factor for franchise and excise taxes. This change will improve Tennessee's business climate by making it more attractive for companies to locate here.
- Simplify tax administration and conform with the federal bonus depreciation provisions of 2017 Tax Cuts & Jobs Act which will allow businesses to recover costs faster as well as increase incentives in investments in Tennessee production.
- Small Business Excise Tax Relief which would establish a standard deduction from excise tax for up to $50,000 of reported net income. This would earn taxpayers a maximum of $3,250 in direct savings for Tennessee businesses.
- Small Business Franchise Tax Relief to exempt up to $500,000 of property from the franchise tax. This gives small- and medium-sized businesses up to $1,250 in tax savings on their annual franchise tax liability for property owned in Tennessee.
- Small Business Relief from the Business Gross Receipts Tax, which would increase the filing threshold for business tax from $10,000 to $100,000. This ensures that only businesses with $100,000 of gross receipts or more will be subject to the business tax. This includes funding to hold local jurisdictions harmless.
- A state paid family leave tax credit against franchise and excise tax for a two-year pilot period that will mirror the federal tax credit.
Tennessee's tax structure--including no income tax, low property taxes and no estate or inheritance tax--has long made it a destination for retirees. Governor Lee's proposed budget includes tax incentives for entrepreneurs and families that will hopefully spur economic growth by encouraging more businesses to move to the state and more people to start up their own businesses, while also decreasing the tax burden on small businesses.
While these proposed changes have not yet been approved, we expect to see a final budget in late spring/early summer of 2023. If you have questions about these don’t hesitate to contact us or your local legislators to advocate. The following link can help you find your local officials. https://www.capitol.tn.gov/legislators/
