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)
