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 ranging from $2,000 to $5,000 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 Economic Development Loan Fund, Urban Development Action Grants and the Small Business Administration’s 503 Loan Program.
- Limited funds for manufacturing from the Appalachian Regional Commission.
FastTrack Infrastructure Program
- Grants made to local communities for public infrastructure improvements
- Must be for specific infrastructure projects benefitting one or more companies committed to creating new jobs and/or making new capital investments
- Cover infrastructure such as rail, roadway, port, airport, site, water, sewer, gas and telecommunication improvements
- Require local matching funds based on a community’s ability to pay
FastTrack Job Training Assistance Program
- Grant assisting new or expanding companies with funding to support the training of net new full-time employees.
FastTrack Economic Development Fund
- Provides additional grant support for companies expanding or locating in Tennessee with reimbursable grants made to local industrial development boards
- Aids companies in a variety of ways, including relocation of equipment, temporary office space, capital improvements, retrofitting and other expenditures not previously covered by FastTrack infrastructure or job training grants
- Only used in exceptional cases where the impact of the company on a given community is significant.
FastTrack eligibility and funding levels are determined by:
- Amount of company investment
- Number of new full-time jobs
- Wages of new full-time jobs
- Types of skills and knowledge that must be obtained
- Location of the project