HB 988 - SB 1002
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 22, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
HB 988 - SB 1002
SUMMARY OF BILL: Expands the franchise and excise tax exemption for subsidiaries of
agricultural cooperative associations organized as corporations to include subsidiaries formed as
other certain business entities.
FISCAL IMPACT:
OTHER FISCAL IMPACT
Expanding the agricultural cooperative association franchise and excise tax exemption will result in
a recurring decrease in state revenue beginning in FY25-26, the extent of which cannot be quantified
with reasonable certainty.
Assumptions:
• Pursuant to Tenn. Code Ann. § 43-16-148, all corporations organized as subsidiaries and
controlled by any agricultural cooperative associations are not considered for-profit
corporations and are, therefore, not subject to franchise and excise taxes.
• The proposed legislation expands the exemption to include the following subsidiaries:
corporation, subchapter S corporation, limited liability company, professional limited
liability company, registered limited liability partnership, professional registered limited
liability partnership, limited partnership, cooperative, joint-stock association, business trust,
regulated investment company, REIT, state-charted or national bank, or state-chartered or
federally chartered savings and loan association.
• According to a 2019 report published by the United States Department of Agriculture,
there were 1,779 agricultural cooperatives in the country, 56 of which were in Tennessee.
• According to the Department of Revenue, the number of agricultural cooperatives and their
subsidiaries in Tennessee cannot be quantified based off franchise and excise tax returns.
• Therefore, it is unknown how many agricultural cooperatives and their subsidiaries are
currently in Tennessee, how many are exempt from the franchise and excise taxes, and how
many will become exempt under the proposed legislation.
• The amount of franchise and excise taxes that newly exempt cooperatives and subsidiaries
are currently paying each fiscal year is unknown and cannot be quantified with reasonable
certainty.
• Therefore, the extent to which the proposed legislation results in a recurring decrease in
state revenue, beginning in FY25-26, cannot be reasonably determined at this time.
HB 988 - SB 1002 2
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director