Tax Incentives
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Below is a brief overview of tax incentive programs available to relocating or expanding businesses in Memphis and Shelby County. Download more detailed descriptions of each program by clicking on the links to the right.
Need assistance determining which incentives are right for your business? The Greater Memphis Chamber’s economic development professionals can help. Give us a call.
State Tax Incentives
Jobs Tax Credit
Tennessee allows relocating or expanding businesses a credit against their franchise and excise taxes based on capital investment and jobs creation. The amount of the credit and the period of time during which it can be used varies according to the size of the investment and the type of business. For more information, download the Tennessee Toolkit by clicking on the link to the right or visit: http://www.state.tn.us/ecd/bizserv_excise.htm.
Super Jobs Tax Credit
For larger, more capital-intensive investments, Tennessee has created a Super Credit which applies to those companies investing capital of $100 million or more and creating a minimum of 100 jobs paying at least 100% of Tennessee’s average occupational wage. These credits can be used to offset up to 100% of a company’s franchise and excise tax liability for up to 20 years. For more information, download the Tennessee Toolkit by clicking on the link to the right.
Integrated Supplier Tax Credit
Tennessee extends certain tax credits to suppliers located within the footprint of a project meeting the $1 billion investment threshold and creating 1,000 or more jobs. Regardless of capital investment or number of jobs created, a supplier locating within the footprint of such a project will qualify for a Jobs Tax Super Credit equal to $5,000 per qualified job with a 15 year carry-forward, plus an additional $5,000 per job each year for six years. For more information, download the Tennessee Toolkit by clicking on the link to the right.
Industrial Machinery Tax Credit
For capital investments in industrial machinery, Tennessee offers qualified businesses a tax credit offsetting up to 50% of their franchise and excise tax liability. The credit applies to the purchase, installation and repair of industrial machinery as well as to the purchase and installation of computer, and computer software. For more information, download the Tennessee Toolkit or visit: http://www.tnecd.gov/bizdev_tax.htm.
Headquarters Tax Credit
In order to encourage companies to locate their corporate headquarters in Tennessee, the state offers a broad range of tax credits – including sales and use tax credits as well as franchise and excise tax credits – based on the cost of relocating the company and building a new headquarters facility in Tennessee. Tax credit amounts are based on capital investment and the number of jobs created paying 150% of Tennessee’s average occupational wage. For more information, download the Tennessee Toolkit.
Data Center Tax Credit
The state of Tennessee offers companies tax credits for the purchase of materials related to construction of a data center – a building or buildings housing high technology computer systems and related equipment. Qualifying companies must create at least 25 new jobs paying at least 150% of the state’s average occupational wage and invest a minimum of $250 million in capital. For more information, download the Tennessee Toolkit.
Emerging Industry Tax Credits
If a company can demonstrate a strong growth potential and commit to creating jobs which pay above the county’s average occupational wage, the state can waive the threshold of 25 new jobs created in order to qualify the company for the Jobs Tax Credit. For more information, download the Tennessee Toolkit.
Daycare Facility Tax Credit
In order to encourage the construction of daycare facilities, the state of Tennessee offers companies a tax credit against their franchise and excise tax liability equal to the cost of 25% of the construction of a facility with a cost not to exceed $100,000 per facility and a tax credit not to exceed $25,000 per facility. For more information, download the Tennessee Toolkit.
Sales and Use Tax Exemptions
Tennessee sales and use tax exemptions include:
- No sales tax on purchases, installation and repairs of qualified industrial machinery.
- No sales tax on raw materials for processing.
- No sales tax on pollution control equipment for manufacturers.
- Reduced sales tax rates for manufacturers’ use of energy fuel and water (1.5% vs. 7%).
For more information, visit: http://www.tnecd.gov/bizdev_tax.htm.
Green Energy Tax Credit
Tennessee’s Green Energy Tax Credit grants certified green energy supply chain manufacturers a credit equal to the carbon tax levied by the Tennessee Valley Authority on the certified manufacturer’s energy bill. For more information, download the Tennessee Toolkit.
Pollution Control Equipment Tax Credit
Purchases of pollution control equipment that is mandated by state, federal or local law and that results in the reduction of water and/or air pollution or the elimination of hazardous waste may qualify for tax credits such as exemption from sales and use taxes among other incentives. For more information, download the Tennessee Toolkit.
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Local Tax Incentives
Memphis/Shelby County Payment in Lieu of Tax (PILOT)
Projects involving large capital investment and high levels of job creation may qualify for a property tax freeze. Approval is based on a variety of performance standards, including the number and type of jobs created, annual base wage, capital investment in real and personal property, and the location of the project. Property taxes are frozen at the pre-development level. To find out more or begin the application process, visit: http://www.dobizinmemphis.com/incentives/pilotprogram.cfm#.
Diversity Plan
Diversity Plan is an optional add-on incentive to the Memphis/Shelby County PILOT Program. One to two additional years can be added to the end of the initial PILOT term by meeting designated certified minority/small business hiring or contracting goals.
Renewal Community Tax Credits
The Renewal Community (RC) program provides incentives for businesses to locate or expand in any of Memphis’ 68 economically distressed census tracts. Businesses located in the Renewal Community and hiring Renewal Community residents can qualify for a variety of federal tax incentives, including:
- RC Employment Credit, an annual federal tax credit of up to $1,500 for each employee who lives and works for the business in a Renewal Community.
- Work Opportunity Tax Credits (WOTC), a federal tax credit of up to $2,400 for each 18-to-39 year-old new employee who lives in an RC.
- Increased Section 179 Deduction of up to $35,000 of the cost of eligible equipment purchases.
- Commercial Revitalization Deduction, an accelerated deduction on federal taxes to recover certain costs of new and/or substantially rehabilitated commercial buildings in an RC.
- Zero Percent Capital Gains Rate for Renewal Community Assets.
- Bond Financing - Qualified Zone Academy Bonds (QZABs).
To find out if a property or site is inside the Memphis Renewal Community, use Internet Explorer to navigate to: http://egis.hud.gov/egis/cpd/rcezec/ezec_open.htm. To find out more about Memphis Renewal Community incentives, visit: http://www.cityofmemphis.org/framework.aspx?page=519.
Foreign Trade Zone
Memphis’ Foreign Trade Zone Program can provide businesses engaged in international trade with significant advantages, including lower duties, reduced processing fees and quicker movement of goods. Goods can be stored, processed, manipulated and integrated with domestic goods, all before paying duties. The Memphis and Shelby County Office of Economic Development administers a General Purpose For¬eign Trade Zone and assists companies with establishing subzones. To find out more, visit: http://www.dobizinmemphis.com/incentives/ftzprogram.cfm.
Other Federal Tax Incentives Available in Memphis & Shelby County:
- Welfare to Work Tax Credit (WtW), a two-year tax credit for businesses hiring long-term family assistance recipients.
- Environmental Cleanup Cost Deduction where businesses can deduct qualified cleanup costs of hazardous substances in brownfields.
- New Markets Tax Credit, a federal tax credit for investors in commercial projects located within qualifying low-income census tracts. Investors can obtain a tax credit against federal taxes of 5 to 6 percent of the amount invested for each of the years the investment is held, for up to 7 years of the credit period.
- Low-Income Housing Tax Credit (LIHTC), a ten-year credit against federal taxes for owners of newly constructed or renovated rental housing who set aside a specific percentage of units for low-income persons for a minimum of 15 years.
To find out more, visit: http://www.cityofmemphis.org/framework.aspx?page=519.
Millington/Shelby County Payment in Lieu of Tax (PILOT)
Projects involving large capital investment and high levels of job creation may qualify for a property tax freeze. Formal approval for all PILOT applications is determined by the Millington Industrial Development Board. Approval is based on a number of performance standards, including the number and type of jobs created, annual base wage, capital investment in real and personal property, and the location of the project. Property taxes are frozen at the pre-development level.
The PILOT program is a financial incentive that is designed to encourage commercial real estate development in and around the Central Business Improvement District by "freezing" property taxes at the predevelopment level for a predetermined period of time. To be eligible for a PILOT, the value of the building renovations, site improvements or new construction must be equal to or greater than sixty percent (60%) of the total project cost.
The program is administered by the Center City Revenue Finance Corporation through an application and review process.
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