State Programs

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

Excise Tax Credit

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.  This credit can be carried forward 15 years.

Infrastructure Support

Tennessee has a state funded program called the FastTrack Infrastructure Development Program.  Under the guidelines of this program the state can make grants to local governments to help them meet infrastructure requirements for locating and expanding industries as well as address the training needs of a corporation.  Project funding is determined by evaluating each project in terms of capital investment, new jobs created, and the community in which the project locates.  Once a targeted funding amount is established, final approval is subject to FIDP funding appropriated by the General Assembly and approval by the Department of Economic and Community Development’s Loan & Grant Review Committee.  There is an application process, and there are state regulations that apply relative to bidding.

The maximum total FIDP/FJTAP (FastTrack Job Training Assistance Program) grant for any project in any community is $750,000.  This means that the combination of training, site preparation and all infrastructure improvements together cannot exceed this amount.  The amount of the grant that may be used for administration and for architect and engineering services will vary depending on the project type.

Training

The FastTrack Job Training Assistance Program is the division of the Department of Economic and Community Development that focuses on the employment needs of new and existing businesses.  The FastTrack Job Training Assistance Program is Tennessee’s initiative to support industrial recruitment and expansion through direct training assistance for new employees.  FJTAP staff assists each individual company to develop customized training plans and to provide funding for components of that training.  Eligibility for FJTAP support and levels of funding for assistance are determined by:

• The amount of company investment
• The number of new hires and average hourly wage
• The types of skills and knowledge that must be obtained by prospective or newly hired employee.

Pre-employment

Instruction is designed to focus on developing basic skills in new employees.  The program promotes the development of basic skills and allows the company to observe participants for improved employee placement.

Job Specific Training

(Training assistance is targeted to production/technician level individuals.)

Classroom - formal instruction relating to specific skills presented in a classroom environment

On-the-Job Training - instruction that focuses on the development of specific skills and knowledge vital to production.  Training is provided by company technicians or instructors mutually acceptable to the FastTrack Job Training Assistance Program and the company.  Training may take place in the classroom or at the company site.

Vendor or manufacturer of actual manufacturing or service equipment being used by the client may be utilized to deliver specific skills training.

System Support - instruction associated with plant-wide applications.  Instruction may include new methods for increasing mechanization, quality, materials handling, etc.

Development and Coordination - supports the cost associated with the development of instructional materials and coordination of the overall training program.

Travel

Supporting the expense of travel for the purpose of training can be considered as a viable option for the training of new hires and especially for persons who will serve as a company instructor. 

Employee Recruitment/Screening

The Tennessee Department of Labor and Workforce Development, Job Service Division, will provide recruitment and screening services.  Utilizing the client/company’s prepared job specifications, Job Service will recruit the number of persons requested by the company.  The persons will be screened using the company’s specifications.  Those persons meeting the specifications will be referred to the company for employment considerations.

Workforce Development

Leadership Training - is directed toward providing supervisors, team leaders, and managers with the interpersonal skills necessary to motivate and lead production workers towards the accomplishment of organizational goals. 

Team Training - is provided for manufacturing/production employees where interpersonal communication is important in fostering interdependence, cooperation, commitment, motivation, etc.

Instructor Certification - Certification of company personnel insures the availability of certified instructors not only at startup but also on a long term basis.  The weeklong certification seminar provides candidates with the facilitation skills necessary to deliver a wide range of programs.

Infrastructure Financing

Tennessee helps local governments provide infrastructure to support locating or expanding industries through the Tennessee Industrial Infrastructure (TIIP)  program.  Businesses eligible for assistance must be engaged in manufacturing, distribution, or other types of economic activities that export more than half of their product or services outside of Tennessee.  An individual project can qualify for a grant of up to $750,000.