- Tax on the greater of net worth or book value of property owned or used in Tennessee.
- Tax rate is 25¢ per $100.
- Finished goods inventory in excess of $30 million may be excluded.
- Pollution control equipment is exempt from franchise tax base.
- Property under construction and not being utilized is not included.
- Property rented from the industrial development corporation may be valued by capitalizing it on the books.
- Tennessee exempts two thirds (2/3) of the capital investment of companies qualifying for the Jobs Tax Super Credit from the franchise tax base during those tax year in which the annual Super Credit is allowed.
- Tax is based on the net earnings of the company derived from doing business in Tennessee. Companies doing business in Tennessee and other states use a 3-factor apportionment formula of property, payroll and sales with sales double-weighted.
- Tax rate is 6.5%.
- No throwback provision – sales outside of Tennessee are not taxed.
- All capital losses are claimed in the year incurred.
- Net operating losses can be carried forward for 15 years.
- Net operating losses for projects over $100 million may be extended beyond 15 years.
Sales and Use Tax
- 7% state sales tax plus the applicable local rate (2.25%-2.75%) on any person or company who manufactures, distributes or sells tangible personal property within the state.
No sales tax is levied on:
- Purchases, installation and repairs of qualified industrial machinery.
- Raw materials for processing.
- Pollution control equipment for manufacturers.
- Reduced sales tax rates for manufacturers’ use of energy fuel and water (1.5% vs. 7%).
- Qualified industrial supplies.
- Items purchased for resale.
- Containers, packaging and wrapping materials.
- Additional exemptions or credits may be available.
- Attractive depreciation schedules.
No property tax on:
- Finished goods inventories in hands of manufacturers.
- Inventories of merchandise for sale.
- Goods-in-transit (free port).
Personal Income Tax
- No statewide personal income tax.
- Consistently one of the lowest per capita taxed states in the nation.
Source: Tennessee Department of Economic and Community Development (http://state.tn.us/ecd/BD_basic_tax_info.html)