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Tennessee Incentives and Workforce Development Guide

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For a list of Tennessee economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

INCENTIVES

FastTrack Economic Development Fund*
Benefit: Grant provided to local communities to reimburse a company for eligible expenditures not covered by infrastructure or job training grants. The grant can help offset expenses such as relocation, temporary office space, capital improvements and retrofitting.

Eligibility (not comprehensive): Only used in exceptional cases where a company’s impact, such as net new full-time jobs and capital investment, in a community is significant. These funds are available subject to terms of the Accountability Agreement executed by the state, community and company. TNECD is not able to provide incentives prior to the execution and approval of a contract.

FastTrack Job Training Assistance Program* 
Benefit: Grant to provide funding to support the training of net new full-time employees for new and expanding companies.

Eligibility (not comprehensive): Funding levels are based on the number of net new full-time jobs created, amount of capital invested, wages of new employees and the types of skill and knowledge levels required. TNECD is not able to provide training incentives for any positions filled prior to the execution and approval of a contract.

FastTrack Infrastructure Development Program*
Benefit: Grant provided to local governments for public infrastructure needs for new and expanding companies. TNECD will work with the local officials to identify eligible needs for a project, such as water, sewer, rail, gas, electric, roadway, telecommunications or other site improvements.

Eligibility (not comprehensive): Must be for public infrastructure improvements benefiting a specific company generating net new full-time jobs and capital investment; requires local matching funds.
For onsite improvements, the community must provide a PILOT on the real property investment for at least 5 years. TNECD is not able to provide incentives prior to the execution and approval of a contract.

TAX CREDITS AND EXEMPTIONS

Job Tax Credit*
Benefit: Credit of $4,500 per job to offset up to 50% of franchise and excise (F&E) taxes in any given year with a carry forward for up to 15 years.

Eligibility (not comprehensive): Create at least 25 net new full-time jobs within a 36 month period and invest at least $500,000 in a qualified business enterprise.

Enhanced Job Tax Credit*
Benefit:

  • Allows an additional annual credit for locations/expansions in designated Tier 2 and Tier 3 Enhancement Counties. Enhanced JTC can offset up to 100% of F&E liability.
  • Tier 2: 3 year annual credit at $4,500 per job with no carry forward
  • Tier 3: 5 year annual credit at $4,500 per job with no carry forward.

Eligibility (not comprehensive): Create at least 25 net new full-time jobs within a 36 month period and invest at least $500,000 in a qualified business enterprise.

Industrial Machinery Tax Credit
Benefit: Credit of 1% to 10% for the purchase, third-party installation and repair of qualified industrial machinery.

Eligibility (not comprehensive):

  • Manufacturing: includes purchases for machinery; apparatus and equipment with parts; appurtenances and accessories; repair parts and labor.
  • Warehousing and distribution: includes material handling equipment and racking systems with a minimum $10M capital investment within 36 months.
  • Headquarters, call centers: includes computer; network; software or peripheral computer devices, purchased in making required capital investment for job tax credit.

Sales and Use Tax Exemptions*
Benefit:

  • Manufacturing: sales tax exemption for industrial machinery and reduced sales tax rate for utilities at qualified manufacturing facilities.
  • Headquarters: State sales tax credit for qualified personal property purchased for a qualified headquarters facility.
  • Call Centers: Tax exemption on any sales of interstate telecommunication and international telecommunication services sold to a business for use in the operation of one or more qualified call centers.
  • Data Centers: Sales tax exemption for certain hardware and software purchased for a qualified data center.

Eligibility (not comprehensive):

  • Manufacturing: Exemptions include industrial machinery, repair parts and industrial supplies used in the manufacturing process. Reductions include: 0-1.5% tax on water depending on use and 0-1.5% on gas, electricity and various energy sources depending on use.
  • Headquarters: Investment period begins 1 yr. prior to construction/expansion and ends 1 yr. after construction/expansion has concluded, but can be extended to 6 yrs. with permission from the state. HQs receive a non-expiring sales tax credit for 6.5% for qualified personal property directly related to the new full-time job creation.
  • Call Centers: Must have at least 250 jobs engaged primarily in call center activities.
  • Data Centers: Minimum capital investment of $250M and 25 new full-time jobs paying at least 150% of the state’s avg. occupational wage; investment must be made during a 3 yr. period, but can be extended to 5 yrs. for investments under $1B or 7 yrs. for investments exceeding $1B with the state’s permission.

OTHER

Export Assistance: NECD offers Tennessee companies valuable export services for up to two global markets per year at no cost. The State’s offices in the United Kingdom, European Union, Mexico and China provide:

  • Market Checks
  • Market Entry Recommendations and Assistance
  • Market Strategy Reports
  • Business Partner and Distributor Searches
  • Trade and Travel Assistance

Applicant Recruitment and Screening (TDOL): Free assistance with the recruitment and screening of job applicants based on a company’s specific job requirements. More than 70,000 potential employees in statewide database.

State Industrial Access Program (TDOT): Funds the construction of roadways to support industrial areas based on project type, economic benefit, physical constraints and available funding.

* Definition of net new full-time job: 37 1/2 hours a week, 12 months and health coverage offered.

Updated 12/18/2014

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