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HB0635 • 2026

Taxes, Excise

AN ACT to amend Tennessee Code Annotated, Section 67-4-2006, relative to taxation.

Taxes
Active

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

Sponsor
Williams, Powers
Last action
2025-05-08
Official status
Effective date(s) 05/02/2025
Effective date
Not listed

Plain English Breakdown

The official source material does not provide specific details about which federal income tax deductions can be added back, leaving this detail uncertain.

Tennessee Tax Amendment

This bill allows Tennessee taxpayers to add back certain federal income tax deductions and subtract specific amounts from their net earnings when calculating taxes.

What This Bill Does

  • Allows taxpayers to add back federal income tax deductions that are also allowed in determining net earnings.
  • Permits taxpayers to remove certain amounts subtracted from net earnings as per current law.
  • Gives taxpayers the freedom to make these adjustments on their original or amended tax returns at any time.
  • Ensures that no adjustment reduces a taxpayer's net earnings below what it would have been without this amendment.

Who It Names or Affects

  • Taxpayers in Tennessee who file state taxes.

Terms To Know

Net Earnings
The total income after certain deductions and adjustments are made.

Limits and Unknowns

  • The bill does not specify which federal income tax deductions can be added back.
  • It is unclear how the changes will affect taxpayers' net earnings in practice.
  • The Department of Revenue must study and report on the economic impact by January 1, 2026.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

Amendment 1-0 to HB0635

Plain English: The amendment allows Tennessee taxpayers to add back certain deductions from their federal taxable income and adjustments made under specific state tax rules when calculating their net earnings for state taxes.

  • Taxpayers can choose to include in their net earnings any amounts they deducted on their federal tax return that are also allowed as deductions in determining their Tennessee net earnings.
  • Taxpayers may also add back certain adjustments made under subdivision (b)(2) of the same code section when calculating their net earnings for state taxes.
  • Taxpayers have the flexibility to make these additions, adjustments, or removals on any timely filed original or amended return.
  • The amendment does not specify which specific deductions and adjustments are allowed under subdivision (b)(2).
  • It is unclear how this change will affect taxpayers' net earnings in practice without more details about the types of deductions and adjustments involved.
Amendment 1-0 to SB0439

Plain English: The amendment allows Tennessee taxpayers to add back certain deductions from their federal taxable income and adjustments made under specific state tax rules when calculating their net earnings for state taxes.

  • Taxpayers can choose to include in their net earnings amounts that were previously deducted from their federal taxable income or subtracted from their net earnings under the state's tax code.
  • Taxpayers have the option to make these additions, adjustments, or removals on any timely filed original or amended return for any tax year.
  • The amendment does not specify which specific deductions are allowed to be added back, only that they must align with federal and state tax rules.
  • It is unclear how this change will affect overall tax revenue or taxpayer compliance.

Bill History

  1. 2025-05-08 Tennessee General Assembly

    Effective date(s) 05/02/2025

  2. 2025-05-08 Tennessee General Assembly

    Pub. Ch. 343

  3. 2025-05-08 Tennessee General Assembly

    Comp. became Pub. Ch. 343

  4. 2025-05-02 Tennessee General Assembly

    Signed by Governor.

  5. 2025-04-21 Tennessee General Assembly

    Transmitted to Governor for his action.

  6. 2025-04-17 Tennessee General Assembly

    Signed by Senate Speaker

  7. 2025-04-15 Tennessee General Assembly

    Signed by H. Speaker

  8. 2025-04-15 Tennessee General Assembly

    Enrolled; ready for sig. of H. Speaker.

  9. 2025-04-14 Tennessee General Assembly

    Passed Senate, Ayes 32, Nays 0

  10. 2025-04-14 Tennessee General Assembly

    Amendment withdrawn. (Amendment 1 - SA0371)

  11. 2025-04-14 Tennessee General Assembly

    Senate substituted House Bill for companion Senate Bill.

  12. 2025-04-14 Tennessee General Assembly

    Companion House Bill substituted

  13. 2025-04-14 Tennessee General Assembly

    Sponsor(s) Added.

  14. 2025-04-11 Tennessee General Assembly

    Placed on Senate Regular Calendar for 4/14/2025

  15. 2025-04-08 Tennessee General Assembly

    Recommended for passage with amendment/s, refer to Senate Calendar Committee Ayes 10, Nays 0 PNV 0

  16. 2025-04-01 Tennessee General Assembly

    Placed on Senate Finance, Ways, and Means Committee calendar for 4/8/2025

  17. 2025-04-01 Tennessee General Assembly

    Action deferred in Senate Finance, Ways, and Means Committee to 4/8/2025

  18. 2025-03-26 Tennessee General Assembly

    Received from House, Passed on First Consideration

  19. 2025-03-25 Tennessee General Assembly

    Engrossed; ready for transmission to Sen.

  20. 2025-03-25 Tennessee General Assembly

    Placed on Senate Finance, Ways, and Means Committee calendar for 4/1/2025

  21. 2025-03-24 Tennessee General Assembly

    Passed H., as am., Ayes 94, Nays 0, PNV 0

  22. 2025-03-24 Tennessee General Assembly

    H. adopted am. (Amendment 1 - HA0112)

  23. 2025-03-20 Tennessee General Assembly

    H. Placed on Regular Calendar for 3/24/2025

  24. 2025-03-19 Tennessee General Assembly

    Placed on cal. Calendar & Rules Committee for 3/20/2025

  25. 2025-03-18 Tennessee General Assembly

    Rec. for pass. if am., ref. to Calendar & Rules Committee

  26. 2025-03-12 Tennessee General Assembly

    Placed on cal. Finance, Ways, and Means Committee for 3/18/2025

  27. 2025-03-12 Tennessee General Assembly

    Rec for pass if am by s/c ref. to Finance, Ways, and Means Committee

  28. 2025-03-11 Tennessee General Assembly

    Refer to Senate Finance, Ways & Means Committee w/ recommendation, as amended

  29. 2025-03-05 Tennessee General Assembly

    Placed on s/c cal Finance, Ways, and Means Subcommittee for 3/12/2025

  30. 2025-03-04 Tennessee General Assembly

    Placed on Senate FW&M Revenue Subcommittee calendar for 3/11/2025

  31. 2025-02-26 Tennessee General Assembly

    Action Def. in s/c Finance, Ways, and Means Subcommittee to 3/12/2025

  32. 2025-02-19 Tennessee General Assembly

    Placed on s/c cal Finance, Ways, and Means Subcommittee for 2/26/2025

  33. 2025-02-19 Tennessee General Assembly

    Assigned to s/c Finance, Ways, and Means Subcommittee

  34. 2025-02-18 Tennessee General Assembly

    Refer to Senate F,W&M Revenue Subcommittee

  35. 2025-02-12 Tennessee General Assembly

    Passed on Second Consideration, refer to Senate Finance, Ways, and Means Committee

  36. 2025-02-10 Tennessee General Assembly

    Introduced, Passed on First Consideration

  37. 2025-02-05 Tennessee General Assembly

    Assigned to s/c Finance, Ways, and Means Subcommittee

  38. 2025-02-05 Tennessee General Assembly

    P2C, ref. to Finance, Ways, and Means Committee

  39. 2025-02-03 Tennessee General Assembly

    Intro., P1C.

  40. 2025-01-31 Tennessee General Assembly

    Filed for introduction

  41. 2025-01-28 Tennessee General Assembly

    Filed for introduction

Official Summary Text

ON MARCH 24, 2025, THE HOUSE ADOPTED AMEND
MENT #1 AND PASSED HOUSE BILL 635, AS AMENDED.

AMENDMENT #1 rewrites the bill to, instead, make the following revisions to present law:



With regard to the excise tax, authorizes, subject to certain provisions,
a taxpayer, at the taxpayer's discretion,
to
add back to net earnings
(i) a
ny amounts taken as deductions from the taxpayer's federal taxable income that are also allowed to be taken as deductions in determining the taxpayer's net earnings; and

(ii)
a
ny amounts subtracted from net earnings
pursuant to present law
.



Adds that d
iscretionary additions to net earnings made under
this amendment
may be made, adjusted, or removed at the taxpayer's discretion for any tax year on any timely filed original or amended return
. H
owever,
such
adjustments
do
not reduce a taxpayer's net earnings below the amount that would have been computed for the tax year without regard to this
amendment.

Current Bill Text

Read the full stored bill text 
SENATE BILL 439
By Powers

HOUSE BILL 635
By Williams

HB0635
001709
- 1 -

AN ACT to amend Tennessee Code Annotated, Section
67-4-2006, relative to taxation.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-4-2006, is amended by adding
the following language as a new subsection:
( ) The department of revenue is urged to study the economic impact of
adjustments to net earnings and net losses authorized by this section. If such study is
conducted, on or before January 1, 2026, then the department shall report its findings
and recommendations to the finance, ways and means committee of the senate and the
committee in the house of representatives having jurisdiction over tax-related matters.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.