Incentives

The State of Tennessee offers an attractive incentives package to stimulate economic development and propel job growth within the region. 

Franchise and Excise Taxes

Tennessee charges franchise and excise taxes; however, Tennessee also offers a significant jobs tax credit that applies to 25 new jobs or more and a corresponding capital investment of $500,000.  This is a two thousand dollar tax credit applied toward franchise taxes for each new full time employee for qualified business enterprises.  In addition, finished goods inventory in excess of 30 million dollars may be excluded from franchise tax.  Property under construction is excluded from the franchise tax.  Property rented from the industrial development board may be capitalized on the business books for franchise tax purposes.  In regards to the excise tax, businesses receive a one percent credit for the purchase, installation and/or repair of qualified industrial machinery.  The one percent credit applies to warehouse & distribution operations.  Net operating losses may carry forward fifteen years.  And all capital losses may be claimed in the year incurred. 

Property Taxes

There is no property tax in Tennessee on goods in process, finished goods inventories in hands of manufacturers, inventories of merchandise for sale, goods in transit, or pollution control equipment required for compliance with Federal, State or local environmental protection laws.

Sales and Use Tax

There is no sales tax on purchases, installation, and repairs of qualified industrial machinery.  In the case of distribution or warehousing facilities, there is no sales tax on purchases of material handling or racking equipment with a minimum required capital investment of 10 million or more.  There is no sales & use tax on raw materials for processing or for pollution control equipment.  Manufacturers' energy fuel and water are tax-exempt if used directly in a manufacturing process.

Tennessee offers a corporate headquarters relocation tax credit that reduces the sales tax from 7% to .5% on building materials, machinery, and equipment used in the construction or remodeling of a qualified headquarters facility.

There is a refund on taxes paid on goods and services by motion picture production companies filming or producing in Tennessee.  This credit requires an expenditure of $500,000 or more.

For more information contact the TN dept of economic and community development, www.tnecd.gov, or phone toll free 1-877-768-6374.