HB 402 – SB 1101
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 26, 2025
Fiscal Analyst: Justin Billingsley | Email: justin.billingsley@capitol.tn.gov | Phone: 615-741-2564
HB 402 – SB 1101
SUMMARY OF BILL: Creates a property tax exemption for real residential and commercial
property that provides tree canopy, as determined by an implementing agency (agency). Prohibits the
tax exemption from continuing more than seven years, unless the agency permits it.
Requires a property owner claiming such an exemption to file an application with the State Board of
Equalization (SBE). Authorizes the SBE and the agency to each impose a filing fee up to $120.
FISCAL IMPACT:
OTHER FISCAL IMPACT
The fiscal impact of the proposed legislation is dependent upon whether a county elects to come
under its provisions. If a county does elect to do so, there will be a one-time increase in state
expenditures of up to $10,000 for modifications to the online exemption application; any
subsequent, recurring increase to state or local revenue cannot be estimated.
The proposed legislation would also result in a recurring decrease in local revenue and an increase
in local expenditures, both of which cannot be quantified, but are considered permissive.
Assumptions:
• The proposed legislation is permissive and would only apply to counties if their governing
bodies elect to come under the legislation’s provisions by a two-thirds majority vote.
• Any vote would take place at a regularly scheduled meeting resulting in no significant
increase to local expenditures.
• The county’s planning commission, assessor of property, county board of equalization, or a
combination of the three entities would be selected as the agency responsible for creating
an application format and determining the portion of tree canopy sheltering real properties,
upon receiving an application for exemption.
• Any recurring increase in local expenditures relative to determining the portion of real
property that provides tree canopy cannot be estimated but is considered permissive.
• A property owner would be required to file an application for exemption with the SBE.
• According to the Comptroller of the Treasury (COT), the SBE will be able to absorb the
increase to responsibilities utilizing existing staff and resources, resulting in no significant
impact to state expenditures.
HB 402 – SB 1101 2
• The COT will have to modify the existing online exemption application filing system to
accommodate the new exemption type. It is estimated that the cost to modify the system
would result in a one-time state expenditure of up to $10,000.
• The SBE and each agency would be authorized to charge a filing fee that is not to exceed
$120 and is proportional to the value of the property at issue.
• It is not known how many additional property tax exemption applications the SBE or
agencies would receive as a result of the proposed legislation; therefore, any increase in state
or local revenue cannot be estimated.
• For any county that elects to come under the proposed legislation, there would be a
recurring decrease in local revenue for parcels of real property that provide tree canopy.
• Due to multiple unknown factors, such as which counties would come under the legislation
and when, how many properties would qualify for the tax exemption, the value of such
properties, the amount of taxes currently generated, and the reduction in taxes due to the
exemption, any permissive, recurring decrease to local revenue cannot be quantified.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director