Tennessee Tax Credits
Jobs Tax Credit
Tennessee allows “qualified business enterprises” a credit against their franchise and excise taxes based on their capital investment and the number of jobs created. The amount of the credit and the period of time during which it can be used varies according to the size of the investment.
EXAMPLE 1: A company investing $500,000 and creating 25 net new jobs in a 36 month period can claim a Job Tax Credit of $4,500 per job to offset up to 50% of the combined franchise and excise tax. Any unused Job Tax Credit may be carried forward for up to 15 years.
EXAMPLE 2: A qualified business locating or expanding in a Tier 2 county may take 3 years to create 25 jobs, and business locating or expanding in a Tier 3 county may take 5 years to create 25 jobs. The credit may not be taken until the year the 25 job threshold is met unless the business has requested and received a waiver from the Commissioner of Economic and Community Development and Commissioner of Revenue.
Every 100 new jobs equates to a $450,000 franchise and excise tax credit.
In 2010 Tennessee amended the statutory requirements to allow the Commissioner of Economic and Community Development and Commissioner of Revenue to waive the minimum job requirement of 25 net new jobs if the company has made the necessary $500,000 investment in a 12 month period and the jobs are high-skill, high-wage jobs in high technology areas, emerging occupations or skilled manufacturing. A company must request and receive a waiver before claiming the Job Tax Credit.
Qualified business enterprises are as follows:
Job credit enhancements for rural Tennessee counties are found at this link.
Headquarters Tax Credit
In order to encourage companies to locate and expand their regional, national or international corporate headquarters in Tennessee, the state offers a suite of enhanced tax credits to companies that establish or expand a qualified headquarters facility. A "qualified headquarters facility" means a regional, national or international headquarters facility where the taxpayer has made a minimum investment of either. Consider the following criteria:
Super Jobs Tax Credit
If a taxpayer meets the $10 million capital investment and creates the minimum 100 headquarters jobs paying 150% of the average occupational wage in establishing or expanding a qualified headquarters facility, the taxpayer will also qualify for a Super Credit of $5,000 per job that can be used to offset up to 100% of the taxpayer's franchise and excise taxliability each year for 3 years with no carry forward. Other considerations are as follows:
Sales and Use Tax Credit
The following are sales and use tax considerations:
Headquarters Relocation Expense Credit
The following criteria may quality for relocation expense credits:
The total budget for the Relocation Expense Credit is determined and calculated by the number of existing qualified headquarters positions relocated to Tennessee as follows:
No. of Jobs Relocated Amount Per Position
750 or more $40,000
However, if the headquarters is a $1 billion investment or more the credit amount per position is $100,000.
Relocation Expense Credits are limited to the qualified expenses actually incurred. The Company may start to take Relocation Expense Credits in the first year it incurs qualified relocation expenses up to the amount allowed as a Relocation Expense Credit for that year.
Additional Tax Incentives for Qualified Headquarters
Sales and Use Tax Credit for Qualified Facility to Support an Emerging Industry
The following benefits are also available:
Data Center Tax Credit
Companies may obtain tax credits for the purchase of materials related to the construction of a qualified data center, which is defined as a building or buildings housing high technology computer systems and related equipment in which the taxpayers had made a minimum capital investment of $250 million and has created 25 new jobs paying at least 150% of the state's average occupational wage. Other criteria are as follows: