AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, Part 20 and Title 67, Chapter 4, Part 21, relative to credits against franchise and excise tax liability.
The implications of HB0424 could be significant for taxpayers and businesses in Tennessee. By making tax credits transferable, it may increase liquidity and flexibility for businesses looking to reduce tax liabilities. This shift could potentially stimulate investments, as businesses would have the ability to sell or transfer tax credits to other entities, possibly making them more attractive to prospective investors. The evaluation of such an economic impact reflects an effort to modernize existing tax benefits, aligning them with contemporary business practices and economic strategies.
House Bill 424 (HB0424) proposes amendments to the Tennessee Code Annotated by specifically targeting franchise and excise tax credits within Title 67, Chapters 4, Parts 20 and 21. The bill urges the Department of Revenue to study the potential economic impact of making all franchise and excise tax credits transferable. This means that the credits, which are typically tied to the entity that initially qualifies for them, could instead be assigned to any other person or entity. The findings of this proposed study are to be reported by January 1, 2026, allowing for both the Senate and House committees to evaluate the economic implications before further legislative action occurs.
Notably, the bill draws attention to the balance of interests between promoting economic development through tax incentives and maintaining fiscal responsibility within the state budget. While supporters advocate for the potential benefits of transferable credits, critics may argue that these changes could lead to revenue loss for the state if not managed properly. Additionally, there could be concerns about the equitable distribution of tax benefits and whether certain groups might disproportionately benefit from these transferable credits, creating divide among businesses in the state.