State Fact Sheet

Tax Incentive Evaluation Law: Tennessee

Note: This page was updated in April 2016 to include a longer, more complete excerpt from the Tennessee tax incentive evaluation law.

To ensure that economic development tax incentives are achieving their goals effectively, many states have approved laws requiring regular, rigorous, independent evaluations of these programs. For a list of states that have passed evaluation laws since the start of 2012, click here.

Tennessee

H.B. 291, enacted May 20, 2015

What it does

Requires evaluation of all major tax incentives

The commissioners of economic and community development and revenue will collaborate to review economic development tax credits on a four-year cycle.

Evaluators will assess the fiscal and economic impact of each incentive.

Ensures that reports draw policy-relevant conclusions

Evaluations will include a recommendation to modify, discontinue, or extend each credit.

Evaluators will provide reports to the governor, speakers of both houses, and legislative budget and tax committees.

Excerpt from Tennessee’s law: Evaluation criteria

The review shall evaluate the previous four (4) fiscal years and may include an evaluation of the purpose of the credit, foregone revenue to the state as a result of the credit, any benefits provided to the state as a result of the credit, and the estimated indirect economic impact of the tax credit, where applicable.

The report shall include a recommendation to modify, discontinue, or take no action with respect to each credit. The departments shall prepare a report of their findings and recommendations and shall deliver such report to the governor, the speakers of both houses, the finance, ways and means committees of both houses, and the Office of Legislative Budget Analysis no later than January 15, 2017.