Tennessee House Bill HB1047

Tennessee 2025-2026 Regular Session

• Introduced: 2/5/25
• Refer: 2/10/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 4; Title 8; Title 9; Title 12, Chapter 3; Title 45; Title 50; Title 56, Chapter 1 and Title 67, relative to employee-owned businesses.

Summary

HB1047, titled the “Employee Ownership, Empowerment, and Expansion Act,” creates a new state tax incentive to encourage business owners to convert their companies into employee-owned structures. The bill authorizes a credit for a portion of conversion costs for businesses that transition to an employee stock ownership plan (ESOP), an employee ownership trust, or a worker-owned cooperative. The credit is available for tax years beginning on or after January 1, 2026, and before January 1, 2031, and is capped at $25,000 for conversions to a worker-owned cooperative or employee ownership trust, or $100,000 for conversions to an ESOP.

Impact

The bill amends Tennessee tax law to add a new credit under Title 67 and exempts worker-owned cooperatives, employee ownership trusts, and ESOPs from a tax imposed under Section 67-4-712. It also expands state procurement-related definitions and preferences in Title 12 to recognize “Tennessee employee-owned businesses,” defined as businesses at least 51% owned and controlled by an employee ownership trust, ESOP, or worker-owned cooperative. In addition, the Department of Revenue must administer applications, may audit claims, must conduct outreach to minority-owned businesses within existing resources, and must report by January 1, 2026, on metrics for evaluating the tax expenditure.

Sentiment

The bill appears generally supportive and pro-business, with a policy goal of promoting employee ownership as a succession and wealth-building tool. Its structure suggests broad legislative interest in helping owners sell to employees and in expanding the visibility of employee-owned firms in state programs. No committee transcripts or recorded votes were provided, so there is no direct evidence of opposition or amendment debate in the available materials.

Contention

The main policy questions likely concern the cost and effectiveness of the tax credit, the size of the credit caps, and whether the Department of Revenue has sufficient administrative capacity to review applications, conduct audits, and track outcomes. Another possible point of discussion is the bill’s targeted outreach to minority-owned businesses and whether the benefits will be accessible to smaller firms versus larger businesses better positioned to absorb conversion costs. Because no transcripts or votes are included, specific objections or supporters cannot be identified from the record provided.