Tax Credits / Incentives

Incentives

To make your operation in Jackson even more competitive, the City of Jackson, Madison County, and the State of Tennessee offer an array of incentives.

Many incentives help the company reduce its upfront expenditures; others make it financially easier to buy the needed land, building, and equipment to get started in a new location. Tennessee is a profitable choice for the location of your new business or the expansion of an existing one. Our competitive incentive package includes:

Local Incentive

  • Jackson-Madison County's Payment in Lieu of Tax (PILOT) program can substantially reduce a company's tax burden for a period of time. The amount of abatement is based on the number of jobs created and the dollar amount invested. PILOTs can be available for new or expanding manufacturing or distribution companies.

Sales and State Property Tax Incentives

  • Finished goods inventory is exempt from local property tax.

  • Industrial machinery is exempt from sales tax.

  • There is no sales tax on raw materials or pollution control equipment.

  • There are reduced sales tax rates for manufacturers' use of energy fuels and water.

  • Attaractive depreciation schedules (8 years; straight-line basis).

  • Corporate Excise Tax Credits

  • Franchise Tax Credits

  • No Personal Income Tax

  • Sales and Use Tax Exemptions

  • Other Tax Credits

Corporate Excise Tax

  • The Industrial Machinery Tax Credit provides an excise tax credit of 1% for the purchase, installation, and/or repair of qualified industrial machinery. A credit equal to 1% of the cost of industrial machinery purchased or leased during the tax year and located in Tennessee may be taken against the excise tax liability. The credit and any carryover thereof may not exceed 50% of the tax liability for the year in which it is taken and may be carried over for no more than 15 years.
  • If any industrial machinery purchased is removed from the state, sold, or otherwise disposed of during its useful life, the state may recover a portion of the credit given.
  • If industrial machinery is leased for less than 80% of its useful life, the amount of the credit will be determined by multiplying the purchase price by the percent of the useful life for which the machinery is leased.

Franchise and Excise Tax Job Credits

A job tax credit of $4,500 (normally $2,000) for each net new full-time employee job will be allowed against a taxpayer's franchise and excise tax liability for any year provided that:

  • The job is a newly created position in Tennessee and did not exist as a position in any business for at least 90 days prior to being filled by the taxpayer.

  • The job was filled during the tax year and was in existence at the end of the tax year.

  • The taxpayer has met the required capital investment of $500,000 in the qualified business enterprise.

  • The credit will first be available in the tax year in which the qualified business enterprise increases net new full-time employment by 25 or more jobs and in those subsequent tax years in which further net job increases occur above the level of employment established when the credit was last taken.

  • The new full-time employee jobs are filled prior to January 1, 2008.

  • For a company with less than 1,000 employees in Tennessee, the credit can be used to offset up to one-third of the total franchise and excise tax liability each year. The credit can be carried forward 15 years.