Business Resources

Taxes & Incentives ~ Tax Structure

 

Jobs Tax Credit

• A company investing $500,000 & creating 25 new jobs can claim a $2,000 credit against their franchise and excise tax over a period of 15 years.
• If the company locates in an economically distressed county, the JobS Tax Credit increases to $4,500 per job with a 15-year carry forward.
• The percentage of tax liability companies are able to offset ranges from 33.3% to 100% based on the number of jobs created ranging from 25 to 5,000 or more.          

Jobs Created	Amount of Credit	Full-time TN Jobs	Percentage Offset
25	$112,500	75	33.33%
100	$450,000	999	33.33%
500	$2,250,000	1100	50%
999	$4,495,500	3000	75%
1000	$4,500,000	5100	100%

Emerging Industry Tax Credits

If companies can demonstrate a strong growth potential and commit to creating jobs which pay above the county's average occupational wage, the state may waive the threshold of 25 new jobs created in order to qualify for the Jobs Tax Credit.

Super Jobs Tax Credit

• Super Jobs Tax Credit is for those companies making capital investments in excess of $100 million and creating at least 100 jobs with the wages equal to or greater than 100% of the state average occupational wage.
• These credits can be used to offset up to 100% of the companies F&E tax liability, but must be taken in the first tax year after the job creation and capital investment thresholds have been met and can be taken annually.
• The Super Credit does not include carry-forward provisions and is available in addition to the Jobs Tax Credit.
• Allows companies to exempt 2/3 of the required capital investment on Schedule G of the F&E tax return. Investments must be made during a 3-year period, but can be extended to 5 years (or in the case of $1 billion investment, 7 years) at the discretion of the Commissioner of ECD.

Super Credits are available at the following levels:

Capital Investment	Jobs Created	Size of Credit per job, per year	Years Available
$100 million	100	$5,000	3
$250 million	250	$5,000	6
$500 million	500	$5,000	12
$1 Billion*	1,000	$5,000	20

  *Projects qualifying in this category must create jobs paying 150% of the state's average occupational wage.

Integrated Supplier Tax Credit

Tennessee extends certain tax credits to qualified suppliers located within the footprint (footprint determined on a per project basis) of a project meeting the $1 billion investment threshold and creating 1,000 or more jobs.  A qualified supplier locating within the determined footprint of such a project will qualify for a Jobs Tax Super Credit equal to $5,000 per job with a 15 year carry-forward, plus an additional $5,000 per job each year for six years.

Industrial Machinery Tax Credit

• Credit applies to the purchase, installation and repair of qualified industrial machinery.
• Credit applies to the purchase and installation of computer and telephone equipment purchased in order to meet the capital investment thresholds of the Jobs Tax Credit.
• The credit may be used to offset up to 50% of the total franchise and excise tax liability.
• This credit has a 15-year carry forward.

 

Capital Investment	Percentage of Credit
Less than $100,000,000	1%
$100,000,000	3%
$250,000,000	5%
$500,000,000	7%
$1,000,000,000	10%

Pollution Control Equipment Tax Credit

If a company obtains a certificate from the Tennessee Department of Environment and Conservation certifying that the company's purchase of pollution control equipment is mandated by the state, federal or local law and the equipment will result in the reduction of pollution in the water or air or the elimination of hazardous wastes, the equipment can be taxed at a salvage value for the purposes of calculating tangible personal property tax.

The certificate will also exempt the equipment from sales and use tax and exclude it from calculation of a company's franchise tax liability.