Taxes - As introduced, allows a taxpayer to annually elect to take a bonus depreciation deduction of 40 percent of the cost of assets purchased on or after January 1, 2026, during the tax year in which the assets were purchased when calculating net earnings or net losses for excise tax purposes; allows the taxpayer to take the federal depreciation percentage if it exceeds 40 percent. - Amends TCA Title 67, Chapter 4, Part 20.

HB 477 allows Tennessee businesses to choose a 40% bonus depreciation deduction for the cost of new equipment purchased on or after January 1, 2026, when calculating excise tax. This applies directly to businesses that buy qualifying assets (like machinery or equipment) after 2025. The bill lets taxpayers elect the 40% deduction or, if federal law increases its bonus rate above 40%, use that higher federal percentage instead. It modifies Tennessee’s excise tax code to align with these federal depreciation rules for assets bought in 2026 or later.