Tennessee Senate Bill SB0032

Tennessee 2025-2026 Regular Session

• Introduced: 1/6/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, Part 20, relative to the deduction for bonus depreciation for excise tax purposes.

Summary

SB0032 amends Tennessee’s excise tax rules for bonus depreciation deductions. For assets purchased on or after January 1, 2023 and before January 1, 2026, the bill keeps Tennessee aligned with Section 168 of the Internal Revenue Code as applied under the federal Tax Cuts and Jobs Act of 2017. Beginning January 1, 2026, it changes the state deduction framework so taxpayers may annually elect to deduct 40% of the cost of depreciable assets in the year the assets are purchased. The bill also includes a federal conformity trigger: if the federal government later increases the bonus depreciation percentage above 40% for assets, Tennessee taxpayers may elect to use that higher federal percentage instead. In effect, the bill creates a future state bonus depreciation deduction that is partly fixed at 40% but can rise if federal law becomes more generous.

Impact

The bill amends Tennessee Code Annotated, Title 67, Chapter 4, Part 20, specifically the excise tax deduction provisions for bonus depreciation. It affects taxpayers that purchase depreciable business assets and compute net earnings or net loss for Tennessee excise tax purposes. The measure changes how Tennessee conforms to federal depreciation rules after 2025 and establishes a state-level deduction election tied to federal bonus depreciation changes.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate, support, or opposition in the available record. Based on the text alone, the bill appears technical and tax-administrative in nature, aimed at updating depreciation treatment rather than making a broad policy change. The absence of recorded discussion suggests the measure may have been treated as a routine conformity or tax adjustment bill.

Contention

The main potential point of contention is the fiscal and policy effect of allowing accelerated depreciation, which can reduce taxable income and therefore state revenue. Taxpayers and business groups may favor the deduction because it improves cash flow and investment incentives, while revenue-focused stakeholders may be concerned about the cost to the state treasury. Another possible issue is the bill’s partial decoupling from federal law after 2025, since it sets a 40% state deduction unless federal bonus depreciation rises above that level, which could create complexity for taxpayers and tax administrators.