Taxes & Financing
Tennessee’s “tax effort” – how much it uses its capacity to tax compared with other states – is among the lowest in the nation. The state tax structure is highlighted by:
- No state tax on wages.
- No inventory tax on finished goods or goods-in-process.
- No sales tax on qualified industrial machinery and distribution warehouse equipment (with required capital investment).
- Excise tax credit equal to 1% of the purchase price of industrial machinery and distribution warehouse equipment (with required capital investment).
- Jobs tax credit $2,000 or $3,000 per full-time employee for eligible businesses that meet requirements of increased employment and additional capital investment.
- Tax exemption on finished goods inventory in excess of $30 million on or after 7/15/98.
- A graduated, weighted sales apportionment formula for franchise and excise taxes.
Fifty-eight Industrial Development Boards in Middle Tennessee offer low-interest financing for manufacturing projects. Priority is given to manufacturing projects and other types of economic activities that export more than half of their products or services outside of the state. Other financing opportunities include:
- Loans for industrial buildings and equipment from the state’s small cities CDBG program.
- TVA’s Special Opportunities Counties Program, Economic Development Loan Fund, Urban Development Action Grants and the Small Business Administration’s 503 Loan Program.
- Grants up to $1 million from the Tennessee Industrial Infrastructure Program.
- Limited funds for manufacturing from the Appalachian Regional Commission.