Legislation Lowering Tennessee’s Business Income Tax Gains Support In House

A measure designed to lower Tennessee’s business income tax (excise tax) is gaining support in the House.

House Bill 2301 is a fiscally responsible approach to attract new business to our state and to encourage small business owners to reinvest into their communities by beginning the process of lowering the excise tax from 6.5 percent to 6 percent over a five year period.

The measure would reduce the tax by one-tenth of a percent every year over the next five years, provided revenue growth remains above two percent.

House Bill 2301 also contains built in safety mechanisms that are based upon revenue collections, in the event Tennessee suffers an unexpected economic downturn. If the revenue growth rate is more than one percent but less than two percent, the tax would remain flat.

Should the state’s revenue grow less than one percent, than the tax rate will increase incrementally in the same manner in which it decreased (one-tenth of a percent).

Finally, if revenue collections demonstrate a negative growth rate at any point in the process of lowering the tax, this rate would then return to the original 6.5 percent.

Cutting the business income tax on businesses will put money back into the pockets of owners so they can expand and create new jobs.