Senate Bill 40, known as the "Employee Ownership, Empowerment, and Expansion Act," aims to promote employee-owned businesses in Tennessee by providing tax incentives for businesses that establish employee stock ownership plans (ESOPs), employee ownership trusts, or convert to worker-owned cooperatives. The bill introduces a new section to the Tennessee Code Annotated, which allows qualified businesses to receive a tax credit for up to 50% of their conversion costs, with specific caps depending on the type of ownership structure they adopt. The bill also outlines definitions for key terms such as "qualified business," "employee ownership trust," and "worker-owned cooperative," and mandates that the Department of Revenue conduct outreach to minority-owned businesses regarding these tax credits.

Additionally, the bill amends existing laws to clarify the tax treatment of employee-owned businesses, ensuring that the tax imposed does not apply to worker-owned cooperatives, employee ownership trusts, or ESOPs. It also includes provisions for the Department of Revenue to track metrics related to the effectiveness of these tax incentives and requires the commissioner to promulgate rules to implement the new section. The bill's various sections have staggered effective dates, with some provisions taking effect as early as July 1, 2025, while others will apply to tax periods beginning on or after January 1, 2026.

Statutes affected:
Introduced: 67-4-712, 12-3-1102, 12-3-1103(a), 12-3-1103, 12-3-1104, 12-3-1104(a)(2)