Tennessee excise tax keeps the old bonus phase-down

Notice 25-36 says Tennessee remains coupled to the TCJA bonus depreciation schedule under the Tennessee Works Tax Act, and does not adopt the 100% rate in the 2025 federal law. Excise bonus is 80% for 2023, 60% for 2024, 40% for 2025, 20% for 2026 and nothing after.

In the department’s example, a $50,000 asset placed in service August 1, 2025 gets $20,000 of excise bonus. The taxpayer adds back $30,000 on Schedule J, line 3, depreciates that $30,000 under MACRS and deducts it on Schedule J, line 16.

Qualified production property gets no bonus at all for excise purposes and is depreciated as nonresidential real property.

• Public Chapter 343 lets a taxpayer add back federal deductions to net earnings, as long as the excise base does not end up lower.
• Public Chapter 455 exempts subsidiaries of agricultural cooperatives.
• Public Chapter 496 bases the community investment credit on the average monthly loan balance from 2026.