House Bill 1494 introduces a new tax credit for qualified businesses that make monetary contributions to eligible charitable organizations in Tennessee. The bill defines "eligible charitable organization" as a nonprofit that meets specific criteria, including being exempt from federal income tax under 501(c)(3), having at least 50% of its beneficiaries from Tennessee, and at least 25% from tier 3 or tier 4 enhancement counties. For tax years starting January 1, 2027, and ending before January 1, 2032, businesses can receive a credit of 50% of their contributions, capped at $5,000 per business per year. The bill also stipulates that no more than 20% of credits can be allocated to a single organization and that a maximum of 10 organizations can be approved by the governor's office.

To qualify for the credit, organizations must submit an application detailing their projects and how contributions will be used, along with a certification of eligibility. The bill mandates that organizations reapply for approval each year and limits their approval to three consecutive years. Taxpayers claiming the credit must file an application with the commissioner, who may conduct audits to ensure compliance. Unused credits can be carried forward for up to 25 years. The bill also requires the department to report on the effectiveness of the tax expenditure by January 1, 2027. The act will take effect upon becoming law for form promulgation, while other provisions will be effective from July 1, 2026.