Governor Haslam signs Sen. Watson’s bills to promote business growth and investment via tax credits

(NASHVILLE) May 14, 2018 – Two pieces of legislation sponsored by Senator Bo Watson (R-Hixson) that promote business growth and investment in the form of tax credits have been signed into law by Governor Bill Haslam. Senate Bill 157 ensures that grants given to companies from the Tennessee Department of Economic and Community Development (ECD) are not counted as taxable income under the new federal tax code.  The other measure, Senate Bill 2647, enables Tennessee to apply the angel tax credit (ATC) to a wider group of investors.

“Business investments, whether in the form of an angel investor or state grant, are great for our economy and help promote business growth,” said Senator Watson. “I am pleased to see these bills signed into law that encourage investments through tax credit incentives.”

The recent passage of federal tax reform brought new provisions that unintentionally broadened Tennessee’s business income tax base, and as a result making economic development grants taxable. Therefore, Senate Bill 157 was needed to clarify that economic development grants committed prior to December 22, 2017 will not be taxable.

Senate Bill 2647 adds Single Purpose Vehicles (SPV) to the ATC. The purpose of SPV’s is to consolidate investments from multiple angel investors into one LLC that holds the investments in a startup company.

“Angel investors are the lifeblood of startups in Tennessee. As we’ve tried to increase the amount of capital investment into these startups, we’ve learned that many of the angel investors coordinate their investments using this [SPV] kind of structure. So this bill will enable us to promote the angel tax credit to a wider group of Tennessee angel investors,” added Watson.

“I look forward to seeing the business and job growth that will result from the passage of these two bills,” Watson remarked.

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Posted in Members, News, Sen. Bo Watson