Small Business Tax Relief
Governor Lee’s “Tennessee Work’s Tax Act,” a $400 million tax relief package and one of the largest in state history, passed with strong bipartisan support. The highlights of SB 275/HB 323 include:
- More than $150 million in annual small business tax relief, including raising the exemption threshold for the business tax from $10,000 to $100,000 in gross receipts (140,000 businesses will qualify), exempting the first $50,000 of net income from excise tax (70,000 will qualify, maximum savings of $3,250) and protecting the first $500,000 in property investment from the franchise tax (68,000 will qualify, maximum savings of $1,250)
- $64 million to simplify tax administration and conform with the federal bonus depreciation provisions of the 2017 Tax Cuts & Jobs Act, allowing businesses to more quickly recover costs and further incentivize investment
- Aligning Tennessee with more than 30 states by adopting “single sales factor” apportionment for the franchise and excise tax (removes property & payroll in the calculation over a three-year period)
- Extending the in-state business tax exemption to manufacturers with storage facilities within a 10-mile radius
- $273 million for a one-time, three-month sales tax holiday on grocery items from August through October
Tangible Personal Property Tax Reform
NFIB led the way to reduce the administrative burden on small businesses that must file the tangible personal property (TPP) tax schedule each February. With passage of SB 384/HB 804, approximately 135,000 small businesses will have the option to pay a small tax and bypass filling out the schedule, which can be costly and time-consuming. Businesses with $2,000 of TPP or less or between $10,000 and $2,000 of TPP will have this choice beginning in 2025. All businesses still must fill out the schedule next year. We will share a comprehensive update separately in the weeks ahead.
Interview ‘Ghosting’ Addressed
Small businesses have complained consistently about interview no-show’s, also called ghosting, in recent years. With passage of SB 1285/HB 1060, employers will have the option to report no-shows on a website that the Department of Labor & Workforce Development is improving. The bill better defines what constitutes a work search and increases required weekly work searches from three a week to four in order to certify for unemployment benefits. Non-compliance would result in loss of unemployment benefits for that week only.
Work Output Mandates Prohibited
Legislation passed that ensures local governments cannot 1) dictate limits on hours an employee works; 2) regulate worker output; or 3) mandate certain benefits at a private employer. SB 681/HB 774, the “Protecting Tennessee Businesses and Workers Act,” builds on previous efforts since 2013 to preempt local governments from private employer mandates relating to wages, paid leave, healthcare and predictive scheduling. These workplace decisions should always be between private employers and their employees, many of whom want extra hours and overtime.
Secret Ballots Required of Entities Receiving State Dollars
SB 650/HB 1342 preserves the right of a secret ballot in unionization efforts in instances where employers receive economic development incentives from our state. In such situations, a process called “card check” (where unions collect signatures in the open in efforts to unionize an employer) would be prohibited and a secret ballot would be required. Tennessee workers deserve the right to a private vote and should never be subject to any attempt at intimidation.
Labor Mandates Defeated
Dozens of mandates on your business were defeated again. NFIB testified against a bill (SB 166/HB 278) that would have allowed local governments to require their contractors to pay leave. NFIB also successfully opposed bills that would have doubled OSHA penalties, established a state minimum wage, and many others.