Tax Information

Tennessee Offers Valuable Tax Incentives

Corporate Excise

  • Excise Tax Credit equal to 1 percent of the purchase price of qualified industrial machinery including certain leased equipment
  • Excise tax credit equal to 1 percent of the purchase price of equipment associated with the required capital investment by a distribution or warehouse facility
  • Net operating losses can be carried forward 15 years
  • All Capital losses can be claimed in the year incurred
  • Contributions are fully deductible in the year made

Franchise

  • Jobs tax credit of $2000 or $3000 per new full-time employee for eligible businesses that meet requirement of increased employment and additional capital investment.
  • Property under construction not being utilized by the corporation is excluded from the franchise tax
  • Property rented from an industrial development board may be capitalized on the corporate books
  • Pollution control equipment is exempt from the franchise tax

Sales

  • No sales tax on industrial machinery that is necessary and primarily for the fabrication of a product
  • No sales tax on repairs to industrial machinery
  • No sales tax on pollution control equipment
  • Reduced sales tax rates for manufacturer's use of energy fuel and water; tax-exempt if used directly in manufacturing process.

Property

  • No state property tax
  • No property tax on goods-in-process
  • No property tax on finished goods inventories
  • No property tax on goods-in-transit(Freeport)

Personal Income

  • Tennessee has no state income tax on wages or salaries. However, certain dividend and interest income received by a Tennessee resident is taxable.

Additional Tax Credits

  • Targeted job tax credit of up to $2400 per employee for hiring from targeted groups of economically disadvantaged youth and adults
  • Tax credits and reimbursements in enterprise zones (unused credits may be carried forward two years).
  • The "Day Care Incentive Act" establishes credit against corporate franchise and excise taxes for any business that establishes a day-care center for employees' children (subject to funding in the General Appropriations Act)
 
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