Major Tax Cuts Proposed for Tennessee Businesses and Families
By State Senator Page Walley
The Tennessee Works Tax Reform Act of 2023 is advancing in the Senate and cleared our Senate Revenue Subcommittee with a positive recommendation last week. This legislation proposes a number of changes to Tennessee’s tax code to lower the tax burden on businesses, boost Tennessee’s economic competitiveness, promote entrepreneurship and small business formation, and provide targeted relief to families.
The tax cuts would provide significant tax relief to small businesses by lowering the burden of the franchise and excise tax as well as the business tax rate. Under the proposal, over 23,000 small businesses in Tennessee will have their excise tax liability reduced to zero by exempting the first $50,000 in income from the state’s excise tax. It also exempts up to $500,000 of business property from franchise tax liability. The tax cuts would exempt 140,000 Tennessee businesses from the business tax by raising the threshold for business tax exemptions from $10,000 to $100,000 of gross receipts. In addition, it reduces the highest business tax rate from 0.3 percent to 0.1 percent.
The proposal will also help Tennessee lead the nation in economic competitiveness, while prioritizing Tennessee businesses. It incentivizes businesses to hire Tennesseans and headquarter in Tennessee by changing the way the excise tax is calculated to favor businesses with a higher percentage of their properties and jobs located in Tennessee than in other states. It also ensures state tax deductions for research and development (R&D) expenses – which help companies grow, innovate and produce superior products and services. This move comes after the federal government ended yearly R&D tax exemptions for businesses. The measure also removes unfair taxes on certain manufacturing facilities with unsold inventory.
Finally, the proposal will deliver for working families by creating a three-month sales tax holiday on food during August, September and October 2023. It also seeks to incentivize businesses to provide paid family leave to employees by establishing a state paid family leave franchise and excise tax credit on wages paid for a two-year pilot period.
Increasing teacher pay
A bill that would provide pay increases to our Tennessee teachers cleared the Education Committee last week. The legislation would increase the base salary for teachers each year until it reaches $50,000 in the 2026-2027 school year. I am strong supporter of our teachers, who have a very important job of educating the next generation of Tennesseans. I am glad this legislation is advancing in the Senate to raise the salaries of our teachers.
Expanding training compensation for correctional officers and EMS personnel
Correctional officers and deputy sheriffs are required to take 40 hours of in-service training per year, but only deputy sheriffs are paid an $800 supplement to do so. Legislation is advancing which also allows correctional officers and emergency medical services personnel for completing a 40-hour training. Both bills advance to the Senate Finance, Ways and Means committee.
I want to thank everyone who participated in our telephone town hall. I try to keep in touch with citizens through listening meetings across the district, hosting constituents at the capitol, and new technologies like this telephone town hall. Please reach out to me let me know how I can best advocate for you and our district.
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