Category: Tennessee

Tennessee Credits and Incentives

As we mentioned last month, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.

We were recently asked about credits and incentives in Tennessee. I spoke with Reggie Mudd of the Tennessee Dept. of Economic and Community Development and learned some of their details (DECD site click here).

Tennessee’s main tax credits and incentives cover new capital investments, new jobs, industrial machinery, and workforce training.  Local incentives can include property tax abatement.  Incentives and credits are available to a fairly wide range of targeted industries that include manufacturing, processing, warehousing, R&D, computer services, call centers, data centers, headquarters facilities, and others.

Tennessee’s credits and incentives are not as complicated as many states and are generally straightforward. 

  • Jobs Tax Credits are blended with capital investments (usually $500,000) and are tied to threshold levels determined by a county tier system.  These credits can can offset 50%-100% of combined Franchise and Excise (F&E) taxes, depending on location and amounts, and have generous carryforwards up to 15 years.
  • Industrial Machinery Tax Credits offset up to 50% of F&E tax liability.  Also includes computers, software, and devices.  Percentages depend on amount invested.
  • Headquarters Tax Credits offer a variety of inducements for companies locating and expanding headquarters facilities.  Very large credits per job, sales and use tax credits, and relocation expense credits are available.  With prior approval, companies can even convert unused net operating losses to credits against F&E liabilities!
  • Other F&E and Sales and Use credits are available for certain very large projects.
  • FastTrack Job Training Assistance Program (FJTAP) offers comprehensive job training programs and grants (click here).
  • Local property and sales tax abatements are very generous and widely available, but negotiated locally.

Compared to Georgia, Tennessee has:

  • Different corporate taxes:  Franchise and exise taxes instead of income taxes.  No personal state income taxes.
  • broader range of companies eligible for most credits, and a narrower range for training incentives.   
  • Fairly straightforward approach when planning company qualifying activities
  • Many credits can be taken after the fact and on amended F&E returns.They don’t normally require pre-approval for the activity, just pre-approval for claiming the credits.

To summarize, Tennessee is very competitive for new and expanding businesses.  Representatives at the state and local level are eager to help — one official took my call while he was on vacation!

Do any of your clients have Tennessee connections?  If so, Tennessee economic developers will be very helpful in finding incentives.  But make sure you review your clients’ potential qualifying activities early to maximize their $$ benefits!!


Training $$ Incentives in Other States

We have been asked many times about training incentives and credits in states other than Georgia. We found that these states are offering a variety of $$ incentives, including grants, tax credits and reimbursements.  “The incentives are there, and at several hundred dollars or more per employee, the payoff is worth the effort. But you must start now to see that funds are flowing by the end of the year,” according to Mark Coleman, CEO of Training Funding Partners (“TFP”), one of the nation’s leading training reimbursement firms (click here).

Mark points out that many of these state programs are funded directly through employer contributions to unemployment insurance payments, sofunding is often available even in states where budgets are severely upside down. He goes on to say that “the pressure that states are feeling to retain and/or create new jobs is driving a resurgence in training funding levels and overall activity.”

If your clients have locations other than Georgia, they should take advantage of these incentives by:

  • Reviewing their employee training plans for the next 12-18 months so they can speak to overall training initiatives and estimated costs
  • Contacting the state’s Economic and Workforce Development office to speak with a program representative, or seek these answers through the services of a qualified consultant
  • Moving on these initiatives quickly, as the demand is outpacing available funding

Check out these great opportunities!