Taxes

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Tennessee is one of the lowest-taxed states in the nation - for both businesses and individuals. Couple that with competitive corporate incentives at both the state and local levels, low real estate costs, low shipping costs, low utility costs, and a low cost of living, you can see why Memphis is one of the nation’s top cities for corporate relocations and expansions.

Local Taxes

Tax Jurisdiction Rate
Property Tax Rates Shelby County $4.06 per $100 value
City of Memphis $3.11 per $100 value
City of Memphis
(Residents and Businesses)		 $7.13 per $100 value
*Note: Memphis residents & businesses pay Shelby County rate of $4.02 plus city rate ($4.02 + $3.11 = $7.13).
Other
Shelby Co. Municipalities		 Arlington $1.15 per $100 value (plus Shelby Co. tax)
Bartlett $1.49 per $100 value (plus Shelby Co. tax)
Collierville $1.43 per $100 value (plus Shelby Co. tax)
Germantown $1.485 per $100 value (plus Shelby Co. tax)
Lakeland $0.85 (plus Shelby Co. tax)
Millington $1.23 (plus Shelby Co. tax)
Property Tax Ratio of Assessment Residential Memphis 25%
Shelby Co. 25%
Commercial & Industrial Real Memphis 40%
Shelby Co. 40%
Commercial & Industrial Personal Memphis 30%
Shelby Co. 30%
Sales Tax Shelby County, including Memphis 2.25% (Totals 9.25% including state sales tax) *Rate applies to single items up to $1,600. From $1,601 to max. of $3,200 per item, rate is 2.75%
Gross Sales Receipts Tax Rate varies -- 1/9 of 1% to 3/10 of 1%
Payroll (Occupational) Tax None
Head Tax None
Hotel Tax 15.25% (additional 6% added to 9.25% state + local sales tax rate)

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State Taxes

Tax Rate
Sales Tax 7.0% (added to local option sales tax, so total sales tax in Shelby Co. is 7.0% + 2.25% = 9.25%)
*Exemptions include items bought for resale and manufacturers’ exemption for materials that become a component part of the finished product, containers, labeling and packaging; and materials coming into direct contact with the product and consumed in the manufacturing process. Numerous other exemptions - details available upon request.
Property Tax None
Corporate Excise Tax 6.5% on net income from business conducted in Tennessee
Franchise Tax Equity Method: $0.25 per $100, or major fraction thereof, of the issued and outstanding capital stock, surplus and undivided profits; minimum $100
Book Value Method: $0.25 per $100 on book value of all real and tangible goods owned or used by the corporation in Tennessee. Same rate applies to finished goods inventory for distribution facilities, but caps at $30 million
Unemployment Compensation Tax 0.15% to 10% of first $9,000 of wages paid to each employee in calendar year
*New employers: 2.7% other than construction, manufacturing and mining (applies for the first 4 years before moving to an experience-based rate)
Inventory Tax None on finished goods inventory
Personal Income Tax No income tax on wages
Hall Income Tax Taxable dividend and interest incomes are taxed at the rate of 6%. The first $1,250 on an individual return and the first $2,500 on a joint return are not taxed. Any person 65 years of age or older having a total annual income derived from any and all sources of $26,200 or less, or $37,000 or less for joint filers are completely exempt from the tax.

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