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TENNESSEE
TAX INCENTIVES Franchise Tax Tax on the greater of net worth or book value of property owned or used in Tennessee. Tax rate is 25 cents per $100. Finished goods inventory in excess of $30 million may be excluded. Pollution control equipment is exempt. Property under construction and not being utilized is not included. Property rented from local industrial development boards may be valued by capitalizing it on company books. Excise Tax Tax is based on the net earnings of the company derived from the business in Tennessee. Tax rate is 6.5%. 1% credit on the purchase price of qualified industrial machinery and unused credit carried forward for 15 years. 1% credit on telephone equipment and computer equipment purchased under the required capital investment for jobs tax credit. All capital losses are claimed in the year incurred. Net operating losses can be carried forward for 15 years. Three-factor apportionment formula: property, payroll and sales. Additional credits or exclusions may be available. Tennessee does not have a throwback provision for sales outside the state. Sales and Use Tax No sales tax on purchases, installation, and repairs of qualified industrial machinery. No sales tax on raw materials for processing. No sales tax on pollution control equipment for manufacturers. Reduced sales tax rates for manufacturers' use of energy fuel and water (1.5% vs. 7%). Additional exemptions or credits may be available. Income Tax No state income tax based on wages. Property Tax No state property tax. Jobs Tax Credit $2,000 per job ($3,000 per job in special enhanced counties). Applied to both Franchise and Excise Tax. Must create 25 jobs. Must increase capital investment by $500,000 in a qualified business enterprise. May be carried forward for 15 years. The percentage of liability offset ranges from 33.33% to 100% for employment ranging from 1,000 to 5,000 or more. Headquarters Tax Credit Reduction of sales tax from 7% to 0.5% on building materials, machinery and equipment used in the construction or remodeling of a qualified headquarters facility. Day Care Credit Applies to both Franchise and Excise Tax. Credit up to 25% of the cost of a day care facility not to exceed $25,000 per facility with a maximum of $100,000 per year. |