Tennessee Business Advantage

Sales and Use Tax

No sales tax on purchases, installation, and repairs of qualified industrial machinery.

No sales tax on raw materials for processing.

No sales tax on pollution control equipment for manufacturers.

Reduced sales tax rates for manufacturers' use of energy fuel and water (1.5% vs. 7%).

Additional exemptions or credits may be available.

Income Tax

No state income tax based on wages.

Property Tax

No state property tax.

Jobs Tax Credit

$2,000 per job ($3,000 per job in special enhanced counties).

Applied to both Franchise and Excise Tax.

Must create 25 jobs.

Must increase capital investment by $500,000 in a qualified business enterprise.

May be carried forward for 15 years.

The percentage of liability offset ranges from 33.3% to 100% for employment ranging from 1,000 to 5,000 or more.

Headquarters Tax Credit

Reduction of sales tax from 7% to 0.5% on building materials, machinery and equipment used in the construction or remodeling of a qualified headquarters facility.

Day Care Credit

Applies to both Franchise and Excise Tax.

Credit up to 25% of the cost of a day care facility not to exceed $25,000 per facility with a maximum of $100,000 per year.

How Tennessee Compares

The Tax Foundation's latest study, "The State Business Tax Climate Index(2003)," ranked all 50 states in terms of how business-friendly their tax systems are. Tennessee ranked in the Top 10 nationwide, and higher than any of the eight states that border it, largely due to the fact that the state has neither a property nor a wage-based income tax.

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