Tennessee lawmakers reach deal on business franchise tax in the final hours of session

Before the final buzzer sounded, the Tennessee House and Senate came to agreement on what to do with the state’s business franchise tax.

More: TN House and Senate search for compromise on two major bills as session nears its end

At the start of session, Gov. Bill Lee made lawmakers aware that he’d like to do away with the state’s property tax for businesses. In addition, those who have been paying the tax would get a rebate.

More: How much money will Tennessee businesses get back after the state changes how they’re taxed? The state House and Senate can’t agree.

From the start, both chambers had been far apart on exactly how they wanted to handle the governor’s suggestion. But a day after the measure seemed to be on its death bed, they came to an agreement.

“I have, at least, a proposal that I think we have all discussed,” House Majority Leader William Lamberth said, “that may work.”

Their plan would stop taxing businesses based on property owned, instead taking a more income-based approach.

While businesses will start paying under the new model moving forward, the state is also going to offer a rebate for up to three years on what companies have paid into the current model. Those who apply and accept rebates won’t be able to sue the state over what took place in the past, and they will be publicly named on the state website as having received the money. 

Lamberth says the exact amount won’t be listed but rather the tier that they fit in.

“It’s $0-$750 rebate; it’s $751-$10,000, and then about $10,000,” he explained. “And the reason for that is the bulk of your returns are on small business owners.”

Lamberth said the state is doing a tiered system because it allows for more protection of companies’ private taxpayer information.

The price tag on the bill is $1.5 billion.