Bill > HB0156

This bill amends Tennessee tax law to provide two key benefits for child care agencies: first, it exempts child care agencies (as defined in § 71-3-501) from business taxes by adding them to a list of tax-exempt entities, and second, it requires the state to annually allocate and distribute to counties and municipalities an amount equal to the taxes collected from child care services during the 2023-2024 fiscal year in subsequent fiscal years. The bill mandates that these allocations must be made from state sales tax collections before other distributions, with a specific provision excluding revenue from a previous sales tax rate increase. Importantly, the bill will take effect immediately upon becoming law and will apply to tax years ending on or after December 31, 2025, which means child care agencies will begin receiving this tax exemption and the state will start the annual allocation process from that point forward. The goal appears to be providing financial relief and support to child care agencies by reducing their tax burden and ensuring they do not lose previously collected local tax revenues.