Government & Legal Update State Advocacy Update: General Assembly Nears Home Stretch

While April showers bring May flowers, they also signal the end of session may be around the corner for the Tennessee General Assembly. And although it has been another quiet year for insurance-specific legislation (usually a good thing), there are several bills of a broader nature we think are of interest to our members.

Lee’s “Tennessee Works Tax Act”

The Lee administration is proposing legislation to reduce multiple taxes. Called “Tennessee Works Tax Reform Act of 2023,” SB 275/HB 323 by Sen. Jack Johnson (R-Franklin) and Rep. William Lamberth (R-Portland) proposes changes to the sales tax, franchise tax, excise tax, and business tax. The governor recently outlined his plan to make several progrowth changes to Tennessee’s tax code.

The governor’s stated plan to conform to the federal treatment of capital investment, adopt single sales factor apportionment, and reduce the business gross receipts tax rate would strengthen the state’s economy, according to the non-partisan Tax Foundation. Among the changes:

Business License Tax

• Exempts any business with less than $100,000 of sales in Tennessee.

• Lowers tax rate on industrial loan and thrift companies from 0.003% to 0.001% of gross income.

Corporate Franchise & Excise Tax

• Adopts single sales factor apportionment for Tennessee (with a two-year phase-in with 5x weighted sales for the first year, 11x weighted sales for the following year, and single sales factor for all years ending on or after December 31, 2025). Expected tax increase of $17M in the first year and early $100M after fully-phased in.

• Makes 100% bonus depreciation for qualified property under the Tax Cuts & Jobs Act permanent for Tennessee excise tax, otherwise known as “full expensing.”

• Excludes up to $500,000 of real and tangible property from the alternative franchise tax on property.

• Excludes up to $50,000 of net earnings from excise tax, a boon to new businesses

"Garrison-Jordan Survivor Benefits Act”

SB 97/HB 396 by Sen. Page Walley and Rep. Ron Gant (an Insurors member) creates the “Garrison-Jordan Survivor Benefits Act” which increases the maximum weekly workers’ compensation death benefit to a surviving spouse with no dependent child or one dependent orphan from 50 percent to 66.67 percent of the employee’s average weekly wage. Other provisions of the bill:

• Removes remarriage as a terminating event regarding workers’ compensation death benefits, thereby entitling the surviving spouse to one lump sum payment equal to 100 weeks based on 25 percent of the average weekly wages of the deceased employee, subject to the maximum total benefit.

• Authorizes an orphan or other child under certain circumstances to be paid workers’ compensation benefits until 22 years of age.

• Allows an employer or insurer to periodically require a dependent to provide relevant information to ensure integrity of the benefit.

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