TENNESSEE TAX INCENTIVES

Excise Tax: 6.5% of a company's Tennessee based net income.

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: $0.25 per $100 of a company's Tennessee based net worth.

Tax credit of $4,500 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: NO tax on personal earned income in Tennessee. There is a 6% tax on dividends and bond interest received by individuals or other entities.

Property Tax

No property tax on:

• Goods-in-Progress
• Finished goods inventory 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

Local Property Tax Rates

Anderson County tax rate $2.82 per $100
City of Clinton tax rate $ .73 per $100

Assessment ratios

• Industrial equipment 30%
• Industrial real property 40%
• Residential property 25%

Sales and Use Tax: 7% State Rate plus 2.25%-$2.75 within the cities and county. 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.

Unemployment Compensation Tax: 2.7% for most new employers to Tennessee. Manufacturing is 6.5%. The first $7,000 in wages paid to each employee is subject to the tax.

Fast Track Infrastructure Development Program(FIDP): The Tennessee Department of Economic and Community Development provides funds for infrastructure improvements thorough the Fast Track Infrastructure Development Program. These funds can be used for new and existing businesses that are creating or retaining jobs in Tennessee.

Eligible Activities

• Water Systems
• Wastewater Systems
• Transportation Systems
• Site Improvements

The maximum combined grant amount for the FastTrack Infrastructure Program and FastTrack Training Program is $750,000 for any project.

Fast Track Job Training Assistance Program: The Tennessee Department of Economic and Community provide training assistance for new and existing businesses through their Fast Track Job Training Assistance Program. This program helps companies to develop and implement a customized training program that meets their individual needs.

• Pre-employment training
• Vendor training
• Job specific classroom training
• On-the-Job Training(OJT)
• System Support
• Development and Coordination of training program
• Leadership and Team Training
• Travel reimbursements

Recruiting and Screening Services: The Tennessee Department of Labor and Workforce Development can provide the following services to new and existing businesses through their career centers.

• Accepting and screening applications
• Testing
• Referral of qualified applicants
• Administer Workforce Investment Act Program

Tennessee Valley Authority Programs and Incentives: TVA is the largest power producer in the nation. They have experienced a 99.999 percent reliability over the past five years. Their industrial power rates are 19% below the national average. TVA has several programs and incentives that play a vital role with new and existing industries.

Local incentives: The Anderson County Industrial Development Board will consider local property tax abatements on an individual basis.

The Anderson County Development Corporation and Clinton City Council will consider reductions in the price of their industrial park properties.

LINKS

Tennessee Dept. of Economic & Community Development
www.tnecd.gov

Tennessee Dept. of Labor & Workforce Development   www.tennessee.gov/labor-wfd

Tennessee Department of Revenue
www.tennessee.gov/revenue

TVA Economic Development
www.tvaed.com

East Tennessee Economic Development Association
www.eteda.org