Taxes, Excise

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, relative to the "CEO Pay Disparity Tax Act."

Labor Taxes

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: Jones J, Lamar
Last action: 2025-03-19
Official status: Assigned to s/c Finance, Ways, and Means Subcommittee
Effective date: Not listed

Plain English Breakdown

Checked against official source text during the last sync.

CEO Pay Disparity Tax Act

This bill creates a new tax for companies in Tennessee where top executives earn at least 100 times more than the median income of their employees.

What This Bill Does

Adds a new section to Tennessee law called the 'CEO Pay Disparity Tax Act'.
Imposes an extra tax of 0.1% on companies whose CEOs are paid at least 100 times more than the median income of their employees.
Requires the state department to make rules for how this tax will be enforced.

Who It Names or Affects

Companies doing business in Tennessee with a CEO who earns at least 100 times more than the median income of their employees.

Terms To Know

Median income: The middle value of all salaries when they are listed from lowest to highest.
Excise tax: A tax on specific goods, activities, or transactions.

Limits and Unknowns

It is not clear how many companies will be affected by this new tax.
The bill does not specify what the state will do with the extra money collected from this tax.

Bill History

2025-03-19 Tennessee General Assembly
Assigned to s/c Finance, Ways, and Means Subcommittee
2025-03-18 Tennessee General Assembly
Refer to Senate Finance, Ways & Means Revenue Subcommittee w/ negative recommendation
2025-03-17 Tennessee General Assembly
Ref. to Finance, Ways, and Means Committee with a Negative Recommendation
2025-03-12 Tennessee General Assembly
Placed on cal. Government Operations Committee for 3/17/2025
2025-02-18 Tennessee General Assembly
Refer to Senate F,W&M Revenue Subcommittee
2025-02-12 Tennessee General Assembly
Passed on Second Consideration, refer to Senate Finance, Ways, and Means Committee
2025-02-10 Tennessee General Assembly
Introduced, Passed on First Consideration
2025-02-05 Tennessee General Assembly
P2C, ref. to Government Operations Committee for Review - Finance, Ways & Means Committee
2025-02-03 Tennessee General Assembly
Intro., P1C.
2025-01-28 Tennessee General Assembly
Filed for introduction
2025-01-28 Tennessee General Assembly
Filed for introduction

Official Summary Text

Abstract summarizes the bill.

Current Bill Text

Read the full stored bill text

SENATE BILL 405
By Lamar

HOUSE BILL 431
By Jones J

HB0431
002051
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 67,
Chapter 4, relative to the "CEO Pay Disparity Tax
Act."

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 67, Chapter 4, Part 20, is amended by
adding the following as a new section:
(a) This section is known and may be cited as the "CEO Pay Disparity Tax Act."
(b) A pay disparity surcharge must be imposed on each company conducting
business in this state whose top executive is paid at least one hundred (100) times more
than the median income of the company's employees.
(c) The rate of surcharge is to be assessed as an additional one-tenth of one
percent (0.1%) to the excise tax rate imposed pursuant to § 67-4-2007(a) on the
company's net earnings for the next preceding fiscal year for business done in this state
during that fiscal year.
(d) The department shall promulgate rules as necessary to implement this
section. Rules must be promulgated in accordance with the Uniform Administrative
Procedures Act, compiled in title 4, chapter 5.
SECTION 2. For purposes of promulgating rules, this act takes effect upon becoming a
law, the public welfare requiring it. For all other purposes, this act takes effect July 1, 2025, the
public welfare requiring it, and applies to tax years beginning on or after that date.