Tennessee Tax Incentives

Excise Tax

	Receive 1% excise tax credit for:
		the purchase, installation and/or repair of qualified industrial machinery.
		the purchase of qualified equipment associated with the required $500,000 capital investment by a distribution or warehouse facility.
		the purchase of computers, computer networks, software, computer systems, telephone systems and any peripheral devices purchased to reach the "required capital investment" to qualify for the jobs tax credit.

	Net operating loss may carry forward 15 years.
	All capital losses may be claimed the year incurred.

Franchise Tax

	Tax credit of $2,000 (or $4,500 in special enhancement counties) per new full-time employee:
		in businesses that meet requirements of a minimum 25 new full-time jobs and additional capital investment of $500,000 and offer a minimal health care plan.
		for new jobs in the future resulting in a net increase in jobs.
	No franchise tax on:
		finished goods inventory in excess of $30 million for fiscal year beginning on July 15, 1998.
		property under construction, not being utilized by the business.
		pollution control equipment.
	Property rented from an industrial development board may be capitalized on the business books.
	For companies that increase Tennessee investment while also doing business in other states, Tennessee offers double, weighted sales apportionment formula for franchise and excise taxes. (This means that property, payroll and sales are all taxed, but they are taxed in fourths, not thirds. Property and payroll have one fourth each and sales has two fourths.)
	The jobs tax credit can be applied to both the franchise and excise tax. The percentage of franchise and excise tax liability offset allowed ranges from 33 1/3 percent to 100 percent for total employment in Tennessee, ranging from less than 1,000 to 5,000 or more.

Personal Income Tax

Consistently one of the lowest per capita taxed states in the nation.

Property Tax

	No property tax on:
		goods-in-process.
		finished goods inventories in hands of manufacturers.
		inventories of merchandise for sale.
		goods-in-transit (free port).
		pollution control equipment required for compliance with federal, state or local environmental protection laws.
	Attractive depreciation schedules.

Sales and Use Tax

	No sales tax on:
		purchases, installation and repairs of qualified industrial machinery.
		purchases of material handling and racking equipment associated with the required capital investment of $10 million by a distribution or warehouse facility.
		raw materials for processing.
		pollution control equipment of manufacturers.
		reduced sales tax for manufacturers' use of energy fuel and water. Tax-exempt if used directly in the manufacturing process and separately metered.
		any materials that become a component part of the finished product.
		containers, labels and packaging materials if they are sold with or accompany the product at no additional charge.
	Reduced sales tax rates for manufacturer's use of energy fuel and water.
	Credit of 5.5% for sales and use taxes paid on building materials, machinery and equipment used in new or expanded regional, national or international headquarters. Requires capital investment of $50 million.
	Refund taxes paid on goods and services by motion picture production companies filming or producing in Tennessee. Requires expenditures of $500,000.

Other Tax Credits

	The Day Care Incentive
		Credit against franchise and excise taxes for businesses that establish a day care center for employee's children.

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