Senate Bill 40, also 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 defines key terms such as "qualified business," "employee ownership trust," and "worker-owned cooperative," and outlines the application process for businesses seeking these credits.

Additionally, the bill amends existing laws to exempt worker-owned cooperatives, employee ownership trusts, and ESOPs from certain taxes, thereby encouraging their establishment. It also mandates outreach efforts to minority-owned businesses regarding the availability of these tax credits and requires the department to report on the effectiveness of the tax expenditure by January 1, 2026. The provisions of the bill will take effect at different times, with some sections becoming effective on July 1, 2025, and others on 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)