Tennessee Offers Numerous Tax Incentives
Published Apr 07, 2006
FRANCHISE TAX
Jobs Tax Credit:
Tax credit of $2,000 ($4,500 for economically distressed counties) for each new full-time employee for qualified business enterprises that create 25 new full-time jobs and makes a required capital investment of $500,000 in the business fiscal year.
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.
Finished goods inventory in excess of $30 million may be excluded from the franchise tax base.
Property under construction not being utilized by the business is excluded from the franchise tax base.
Property rented or leased from an industrial development board may be capitalized on the business books.
Pollution-control equipment is excluded from the franchise tax base.
Tiered jobs tax credit for companies investing $100 million and creating 100 jobs, $250 million and creating 250 jobs, $500 million and creating 500 jobs, and $1 billion and creating 1,000 jobs – up to a $5,000 per job tax credit.
EXCISE TAX
Receive 1 percent tax credit on qualified industrial machinery, telephone and computer equipment purchased in making the required capital investment for the jobs tax credit, or material handling and racking systems purchased by a warehouse and distribution facility that meets requirements for sales tax exemptions under the sales tax law.
Net operating loss may carry forward 15 years.
All capital losses may be claimed in the year incurred.
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 rates for manufacturer’s use of energy fuel and water. Tax-exempt if used directly in manufacturing process.
Headquarters Tax Credit: Reduction of state sales tax from 7 percent to .5 percent on building materials, machinery and equipment used in the construction or remodeling of a qualified headquarters facility.
PROPERTY TAX
No property tax on:
* goods in process
* finished-goods inventories in hands of manufacturers or warehouse distribution facilities
* inventories of merchandise for sale
* goods in transit (free port)
* pollution-control equipment required for compliance with federal, state or local environment protection laws
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