House Bill 1494, also known as Senate Bill 1596, proposes the establishment of a 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 designated enhancement counties. The tax credit allows businesses to claim 50% of their contributions, capped at $5,000 per business per tax year, for contributions made between January 1, 2027, and January 1, 2032. Additionally, the bill stipulates that no more than 20% of the credits can be allocated to a single organization, and a maximum of 10 organizations can be approved by the governor's office.

To qualify for the tax credit, organizations must submit an application detailing their projects and how contributions will be utilized, along with a certification of eligibility. The bill also outlines the process for taxpayers to claim the credit, including the requirement for documentation and potential audits by the commissioner. Unused credits can be carried forward for up to 25 years. The commissioner is tasked with creating rules to implement the section, and a report on the effectiveness of the tax expenditure must be submitted to the finance committees by January 1, 2027. The act will take effect upon becoming law for form-related purposes, while other provisions will take effect on July 1, 2026.