Tennessee’s Sweeping Property Legislation Means Billions in Refunds for Real Estate Owners

Tennessee will no longer include property value when calculating its business privilege tax (also known as the franchise tax) for tax years ending on or after January 1, 2024. This change, approved by Tennessee Governor Bill Lee on May 10, 2024, is expected to give business owners nearly $2 billion in tax relief, with over $1.6 billion available for refunds. As one of eight states in the U.S. that does not tax individuals, Tennessee hopes to attract more businesses and boost economic growth.

Franchise Tax Calculation

Tennessee imposes a franchise tax on businesses that operate in the state. Before the new law, this tax was based on either a business’ total assets minus liabilities (net worth) or the value of its real and tangible property within Tennessee — whichever amount was higher. The tax rate was 0.25% of this value, with a minimum tax of $100.

For example, if a business owned a $30 million apartment complex purchased in 2019, it would owe approximately $75,000 in franchise tax each year from 2020 to 2023. Starting January 1, 2024, the new law will remove the real estate and equipment value (net book value) from the tax calculation. Under the new legislation, the same $30 million apartment complex might only owe the minimum $100 franchise tax if the business has more liabilities than assets, meaning it has faced substantial losses in the past.

Refund Claiming Procedure

Taxpayers may claim a refund for tax years ending on or after March 31, 2020, by filing an amended return, omitting Schedule G, through the Tennessee Taxpayer Access Point (TNTAP). After the amended return is processed, taxpayers may then file a Claim for Refund of Franchise Tax Paid on Property Measure (Schedule G) form through TNTAP. The state will then issue a refund check after it determines the claim is valid. Although taxpayers may file by other methods, the Tennessee Department of Revenue (TNDOR) recommends filing electronically through TNTAP to expedite the process. All amendments and claims related to Schedule G refunds must be filed prior to November 30, 2024.

Waiver of Litigation Rights

The TNDOR states that by claiming a Schedule G refund, taxpayers waive any right to challenge the franchise tax in court by alleging that it is unconstitutional based on the internal consistency test. However, if a lawsuit is filed before November 30, 2024, taxpayers can still retain this right.

TNDOR’s Publication of Refund Range

Due to the possibility of refund claims, the TNDOR reserves the right to temporarily publish each taxpayer’s name and the range of their refund on its website between May 31, 2025, and June 30, 2025.

Speak to a Weaver professional today if you need assistance with your Schedule G refund claim.

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