Earlier this month, Tennessee’s Department of Revenue issued two important franchise & excise tax notices.

The first relates to federal bonus depreciation conformity after passage of the One Big Beautiful Bill Act (OBBBA) in July. The second covers excise tax treatment of the federal employee retention credit. If these issues impact your business, we recommend that you consult your tax professional.

The OBBBA reinstates and permanently extends 100% bonus depreciation, a highly favorable incentive for business investment. Under the OBBBA, qualifying property acquired on or after January 19, 2025, is eligible for immediate expensing.

What’s Next – NFIB Planned Action

NFIB plans to advocate for necessary legislation in early 2026 that will enable Tennessee to conform to the federal act. Full expensing allows a taxpayer to deduct the entire cost of qualifying assets in the year placed in service rather than depreciating it over many years. This results in:

• Immediate reduction of federal taxable income
• Improved cash flow, enabling reinvestment into operations, equipment, and talent
• Strong incentives for capital investment and modernization
• Simplified compliance with fewer multi-year depreciation schedules
• Economic benefits including job creation and productivity growth

If you have questions about any other state tax issue, please contact State Director Jim Brown at jim.brown@NFIB.org.