NASHVILLE, Tenn. — Tennessee collected far more money from business taxes last year. However, new state financial records show the jump had less to do with a booming economy and more to do with fewer refunds going out the door.
Tennessee’s Annual Comprehensive Financial Report for fiscal year 2025 shows business tax revenue rose by $1.6 billion, a 29% increase from the year before.
The report says a lot of that growth came after franchise tax refunds dropped sharply, following an unusually high refund year in 2024 tied to a change in how the tax was calculated.
That means businesses weren’t necessarily paying a lot more — the state just wasn’t issuing the same level of refunds it had the year before.
The report also details a major new spending move tied to disaster recovery. Tennessee created a $100 million Helene Emergency Assistance Loan Fund to help counties hit by Tropical Storm Helene.
The money came from the state’s general fund and was set aside specifically to support local governments dealing with storm damage.
Even with rising revenues and growing reserves, the report shows a familiar pattern: the cost of running state government still far exceeds the money those services bring in directly.
Tennessee’s governmental activities posted a net expense of $24.6 billion for the year — meaning taxes and other general revenues are still needed to cover the gap.
State auditors signed off on the financial statements with a clean opinion, saying the numbers fairly reflect Tennessee’s financial position.
But they also flagged $23.5 billion in investments that don’t have easily determined market values, including assets tied to pensions and employee benefit funds.
Auditors noted those values are based on estimates from investment managers, and could shift as market conditions change.
All of this comes as lawmakers head into another legislative session with record reserves, ongoing tax debates, and new pressures from disaster recovery.
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Read the full Annual Comprehensive Financial Report below:
