Senate Bill 405, also known as the "CEO Pay Disparity Tax Act," amends Tennessee Code Annotated, Title 67, Chapter 4, by introducing a new section that imposes a pay disparity surcharge on companies whose top executive earns at least 100 times more than the median income of their employees. The surcharge will be an additional 0.1% added to the excise tax rate on the company's net earnings for the preceding fiscal year. This measure aims to address income inequality within corporations operating in Tennessee.

The bill mandates that the Department of Revenue promulgate necessary rules for implementation in accordance with the Uniform Administrative Procedures Act. The provisions of the act will take effect upon becoming law for the purpose of rule promulgation, while the tax implications will begin on July 1, 2025, applying to tax years starting on or after that date.