The Tennessee House of Representatives has made significant amendments to a bill aimed at repealing and refunding the state’s franchise tax, resulting in a reduced refund amount of $813.5 million. House Bill 1893, which introduces key changes to the refund process, mandates the disclosure of companies benefiting from the refund on the website of Tennessee’s Department of Economic and Community Development (ECD). Additionally, it requires these companies to utilize any tax credits issued by the department to offset the refund amount.

The decision to lower the refund amount from the previously estimated $1.55 billion, as stated in the Senate version of the bill, was deliberate, according to Rep. William Lamberth, R-Portland. While Lamberth expressed his belief that the current franchise tax isn’t unconstitutional, he emphasized the importance of ending the tax, citing it as good policy. He also assured that any additional funds allocated to the refund would not be reallocated, providing a safety net in case refund requests surpass initial estimates.

Although the ECD does not disclose individual companies and their respective tax credits, the Tennessee Department of Revenue reported $1.1 billion in tax credits carried over from the previous fiscal year, including $830 million for industrial machinery credits and $252 million for job creation credits. These incentives, in addition to FastTrack grants received by companies, aim to promote economic growth and development within the state.

The bill’s fiscal note highlights the uncertainty surrounding the exact amount of tax credits received by affected taxpayers. Governor Bill Lee’s budget amendment proposed allocating $351.7 million from the current year’s budget to the franchise tax refund fund. As a result of the bill, there will be an estimated nearly $400 million reduction in tax collections for the next fiscal year, with an annual decrease of $405 million thereafter.

Businesses seeking a rebate must file their applications before February 3, 2025. The adjustments made by the Tennessee House reflect ongoing efforts to streamline tax policies and support economic prosperity within the state.