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Taxation

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The State of Tennessee has the 3rd lowest tax burden in the United States, according to the Office of Revenue Analysis for the District of Columbia.  The state does not have personal or corporate income tax.

 

Property Tax

• Tax assessments in Martin and Weakley County are made by the County Assessor of Property. Every effort is made to assess property on a fair and equitable basis.
• There is no State tax on real property in Tennessee. The following property tax rates per $100.00 of assessed value are in effect for Martin and Weakley County. (County taxes are included in the total for the city).

  Within City Limits   Outside of City  
City Tax Rate
$1.044   $0.00  
County Tax Rate
$2.17   $2.17  
Total
$3.214   $2.17  

• There is no property tax on goods-in-process.
• There is no property tax on finished goods inventories in hands of manufacturers and inventories of merchandise for sale.
• There is no property tax on goods-in-transit (Freeport).
• Pollution control equipment required for compliance with federal, state, or local environmental protection laws is exempt.

 

Local Business Tax

The business tax is administered by the state Department of Revenue but collected and imposed by local governments. The owners or operators of all for-profit businesses, except manufacturers subject to personal property taxation and professionals, must pay the local business tax for each place of business located in either the county or the city which imposes the business tax.

Businesses are classified into four groups in which the rate imposed upon the gross sales varies from 1/60 of 1% to 1/8 of 1%. Due dates vary by classification of taxpayers. The tax is levied as a substitute for a property tax on inventories. Businesses exempted include: manufacturers, employees of businesses, certain blind persons, disabled veterans, and the services of certain professionals.

 

Corporate Income Tax

There is no State Corporate Income Tax.

 

Corporate Excise Tax

• Excise tax credit equal to 1% of the purchase, installation, and repairs of qualified industrial machinery.
• Excise tax credit equal to 1% of the purchase price of qualified equipment associated with the required capital investment of $500,000 by a distribution of warehouse facility.
• Net operating loss carry forward of 15 years.
• All capital losses can be claimed in the year incurred.

 

Franchise Tax

• Jobs tax credit of $2,000 or $3,000 (in economically distressed counties) per new full-time employee for eligible businesses that meet requirements of a minimum 25 new full-time jobs and additional capital investment of $500,000. Credit may also be taken for new jobs in future years, which result in additional net increase in jobs.
• Finished goods inventory, in excess of $30 million for fiscal years on or after July 15, 1998, may be excluded from the franchise tax.
• Property under construction, not being utilized by corporation, is excluded from franchise tax.
• Property rented from an industrial development board may be capitalized on the corporate books.
• Pollution control equipment is exempt from the franchise tax.
• Effective 12/15/98, the sales factor is double-weighted for the franchise and excise apportionment formula for multi-state corporations.

 

Personal Income Tax

There is no state personal income tax on wages or salaries; however, certain dividend and interest income received by a Tennessee resident is taxable.

 

Sales & Use Taxes

State: 7% (6% for food and food ingredients for human consumption) County: 2.75%• No sales tax on purchases, installation and repairs of qualified industrial machinery.
• No sales tax on purchases of equipment associated with the required capital investment of $10 million by a distribution or warehouse facility.
• No sales tax on raw materials for processing.
• No sales tax on pollution control equipment. Other pollution control equipment may be eligible for sales tax credit.
• Reduced sales tax rates for manufacturers’ use of energy fuel and water; tax-exempt if used directly in the manufacturing process.
• Credit of 5.5% for state sales and use taxes paid on building materials, machinery, and equipment for new or expanded corporate headquarters (regional, national or international) meeting capital investment requirement of $50 million.
• Refund on taxes paid on goods and services by motion picture production companies filming or producing in Tennessee that meet expenditures requirement of $500,000.

 

Unemployment Compensation Tax

The Tax
• Collected by both the federal and state governments, Tennessee’s portion is a credit against part of the federal taxes owed.
• Tax is paid by employers only. Cannot be deducted from employee’s wages.
• The first $7,000 in wages paid to each employee is subject to this tax.-Taxable wages include: tips, meals, lodging and other payments in kind.

-Non-taxable wages include: payments made by employer for insurance, retirement, or annuities.

Tax Rate
• State tax rate: 2.7% for most new employers to Tennessee.
• Unemployment compensation taxes are paid on a calendar year basis regardless of the employers fiscal year.
• After three (3) full calendar years, the employer is evaluated and a tax rate is assigned.

-Employer’s history of taxes and employees laid off determines the tax.

-Minimum rate: 0%; Maximum rate: 10%

Reporting
• New employers must file an initial report to determine their taxpaying status and receive their Tennessee account number.
• Wage reports and contribution reports must be filed quarterly.
• All employers reporting wages on 250 or more employees must provide information via magnetic media (tape or diskette).

 

Utility Gross Receipts Tax

• The utility gross receipts tax of 3% is based on intrastate gross receipts. Gross receipts taxes are paid by utilities; gas, water, electric power and light companies; and sewage companies. Tennessee offers the following incentives and exemptions:

-Manufacturers and distributors of manufactured or natural gas are taxed at a rate of 1.5%

-Utilities operated by the United States, cities, or political subdivisions of the state are exempt from the gross receipts tax.

– Credit is allowed for corporate franchise and excise taxes paid. Water and electric companies may deduct $5,000 annually from gross receipts.

• The gross receipts tax is due August 1 each year but may be paid in installments.

 

Additional Tax Credits

The Day Care Incentive Act establishes credit against corporate franchise and excise taxes for any business that established a day care center for children of employees.

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