What to Look for in the 2026 Tennessee Legislative Session
On January 13, the Tennessee General Assembly gaveled in the second session of the 114th General Assembly. The session is anticipated to last until late April, at which point lawmakers will return home to begin the campaign season. This year also marks Governor Bill Lee’s final legislative session and budget cycle before he leaves office. We anticipate an active year for issues critical to the business community, and we are committed to keeping our members engaged and informed throughout the process.
The Chamber has identified the following priorities for this year:
- Solid Waste: As the state, particularly Middle Tennessee, faces growing solid waste capacity concerns, reforms to the state’s planning and permitting process are necessary to encourage a regional approach. We will consider creative solutions to incentivize recycling infrastructure without placing an undue burden on businesses and consumers.
- Bonus Depreciation: With the passage of the One Big Beautiful Bill Act, 100% bonus depreciation was made permanent at the federal level. However, Tennessee law remains aligned with older statutes, resulting in a lower bonus depreciation rate in subsequent years. The Chamber, alongside a coalition of partners, will advocate to make 100% depreciation permanent at the state level. Tax experts agree that this change is one of the most pro-growth reforms our state can implement to encourage investment and innovation.
- Legal Reform: While Tennessee has successfully strengthened its legal environment for businesses, further reforms are needed to protect legitimate enterprises from system abuse. We will advocate for an updated definition of “public nuisance” to prevent meritless lawsuits, introduce an open process for political subdivisions using outside counsel in litigation, and push for increased transparency regarding third-party litigation funding.
Beyond our core priorities, we expect the following issues to be centers of debate:
- A Tighter Budget: Tennessee is well-known for its constitutional requirement to pass a balanced budget. This cycle will be tighter than in previous years. Following the post-pandemic boom and rapid state growth, tax revenues reached record highs. While state coffers remain stable, there is less excess recurring revenue available than in the recent past.
- Property Taxes: Communities across the state have seen property assessments skyrocket, creating a significant burden for businesses of all sizes. Property tax reforms will be debated to alleviate this pressure, potentially including a cap on how much local governments can increase taxes without a voter referendum.
- Education Vouchers: Last year, the General Assembly passed Governor Lee’s signature legislation, the Education Freedom Scholarships. The number of scholarships is currently capped at 20,000. With applicant numbers nearly double that capacity, the legislature—with the support of Speaker Sexton, Lt. Gov. McNally, and Governor Lee—will consider expanding the program. This debate will likely be tied to broader budget negotiations.
- Rural Health Transformation Fund: CMS recently awarded the state over $200 million for rural healthcare initiatives. In accepting this grant, the state agreed to work toward new “scope of practice” and “certificate of need” laws to improve healthcare access.
- Infrastructure: As Tennessee continues to grow, the strain on our infrastructure increases. With a significant backlog of road projects, we anticipate legislation to adjust the gas tax based on the Consumer Price Index (CPI), consider issuing bonds for major projects, and explore alternative revenue sources for long-term road funding.
As we navigate this final legislative session under Governor Lee’s administration, the Tennessee Chamber remains your steadfast advocate on Capitol Hill. The decisions made over the next few months—from permanent tax reforms to the strategic management of our infrastructure and education systems—will set the trajectory for Tennessee’s economic health for years to come. We encourage our members to stay engaged as these debates unfold. Your voice is essential in ensuring that Tennessee remains the premier state in the nation to start, grow, and sustain a business. We look forward to a productive session and will continue to provide regular updates as we work to secure a prosperous future for all Tennesseans.