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April 25, 2023
NFIB members will see significant tax relief as a result of several bills that passed the legislature this session
Small Businesses in Tennessee Score Big Legislative Victories in 2023
Small Business Victories
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
Small Business Challenges
NFIB joined other groups in calling for passage of SB 1140/HB 886, which would reinstate modest vendors’ compensation that was removed 20 years ago during a budget crisis. Retailers should not be unpaid tax collectors for the state. The measure failed to be included in the final budget; we will renew our efforts in 2024. Various proposals to eliminate the remaining five professions subject to the professional privilege tax also failed. No professional, in-state or out-of-state, should be taxed $400 annually to go to work. Transportation Reform & Data Privacy While NFIB did not take a position on the governor’s Transportation Modernization Act (SB 273/HB 321), it’s worth noting what it does:- $3 billion to the Transportation Modernization Fund to alleviate urban congestion and fund rural road projects across the state, which includes $750 million allocated to each of Tennessee’s four TDOT regions
- $300 million to expand the State Aid Program for local road projects, allocating 15 times more funding toward local communities than they receive each year for transportation projects
- Ensures that Tennessee has the resources necessary to meet current and future transportation needs by engaging in Public-Private Partnerships (P3s), Alternative Delivery Models and Electric/Hybrid vehicle fee parity
State:
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