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SB 784

Taxes, Exemption and Credits - As enacted, changes the amounts of the franchise and excise tax credits allowed to financial institutions from certain percentages of the unpaid principal balance of certain qualified loans made to eligible housing entities to certain percentages of the month-end average unpaid principal balance of such loans; makes other related revisions. - Amends TCA Section 67-4-2109.

114th Regular Session (2025-2026) Introduced by Page Walley

Tennessee changes how it calculates tax credits for bank housing loans—from total unpaid balance to month-end average balance—affecting lender incentives for affordable housing financing.

Comp. became Pub. Ch. 496
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Bill Summary · SB 784

Legislative bill overview

SB 784 modifies how Tennessee calculates tax credits for financial institutions that make qualified loans to eligible housing entities. Instead of basing credits on the total unpaid principal balance of loans, the bill changes the calculation to use the month-end average unpaid principal balance, which may result in different credit amounts throughout the year.

Why is this important

Tax credits for housing loans influence lending decisions and can affect the availability and terms of financing for affordable housing development. How these credits are calculated directly impacts the financial incentives banks receive for supporting housing projects, potentially affecting housing supply and affordability across Tennessee.

Potential points of contention

  • Credit value volatility: Using month-end averages instead of total balances may create unpredictable credit amounts, making it harder for lenders to project tax benefits and potentially reducing loan incentives
  • Competitive fairness: Banks with different loan portfolios may experience different effective credit rates under the averaging method, raising questions about equitable treatment
  • Housing impact uncertainty: If the averaging methodology reduces overall tax credits available, lenders may decrease housing loan originations, potentially limiting affordable housing development funding

Compiled from official sources — confirm details with the bill’s official record.

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