Paige Smith | Published May 14, 2025 6 Min
Good news for Tennessee business owners: the state has a wide range of tax credit programs that can help offset your overall tax liability. The downside is that only businesses in a handful of key industries—like manufacturing and warehousing—are eligible for the credits.
Review our list below to determine what your business may qualify for.
Business tax credits and incentives in Tennessee
Employment and growth credits
Tennessee offers a handful of employment tax credits, but they are not available to every business. Only businesses in the following industries are eligible to apply:
- Headquarters (that includes administrative, research and development, planning, marketing, personnel, and legal operations)
- Manufacturing
- Data centers
- Warehousing and distribution
- Call centers
Standard Job Tax Credit
Tennessee’s Standard Job Tax Credit is designed to incentivize businesses to invest capital and create new jobs within the state. To qualify, eligible companies must invest at least $500,000 in a growth project within three years and create a minimum number of qualified jobs.
The job threshold depends on where a business is located:
- Businesses in Tier 1 and 2 enhancement counties have to create 25 new jobs
- Businesses in Tier 3 enhancement counties have to create 20 new jobs
- Businesses in Tier 4 enhancement counties have to create 10 new jobs
The tax credit is equal to $4,500 for each qualified job. A qualified job is one that provides health insurance. Businesses can use the credits to offset up to 50% of their franchise and excise taxes.
Learn more about the credit and how to apply here.
Get our step-by-step guide to hiring employees in Tennessee.
Enhanced Job Tax Credit
In addition to the Standard Jobs Tax Credit, the Enhanced Job Tax Credit gives additional tax credits to companies that relocate to or expand within economically distressed Tennessee counties.
Businesses that create new jobs in Tier 2, 3, or 4 enhancement counties can receive a tax credit of $4,500 per new job, on top of what they already received from the Standard Job Tax Credit. This enhanced credit can offset up to 100% of a business’s franchise and excise tax liability.
To qualify, businesses in Tier 2 counties need to create at least 25 new full-time positions and invest at least $500,000 in their business’s growth. Businesses in Tier 3 and 4 also need to invest at least $500,000, but they only have to create 20 or 10 new full-time jobs, respectively.
Learn more about the Enhanced Job Tax Credit here.
Super Job Tax Credit
The Super Job Tax Credit is geared toward major enterprises expanding in or relocating to Tennessee. Companies can get a tax credit of $5,000 per new job they create, as long as they follow one of the two paths below:
- Invest $100 million into their business growth in Tennessee and create a minimum of 100 new jobs that pay at least 100% of Tennessee’s average occupational wage; OR
- Establish or expand a regional, national, or international headquarters in Tennessee with a capital investment of $10 million or more, and create 100 headquarters jobs that pay at least 150% of Tennessee’s average occupational wage
Get more information on the Super Job Tax Credit here.
Franchise and Excise Tax Job Tax Credit for Hiring Persons with Disabilities
This tax credit incentivizes Tennessee companies to hire employees with disabilities. Businesses can receive a $2,000 franchise and excise tax credit for hiring individuals with disabilities in part-time roles, and a $5,000 tax credit for hiring them in full-time positions.
Learn more about the credit here.
Related: 4 easy ways to make your business more accessible to people with disabilities
Industry-specific tax credits
Industrial Machinery Tax Credit
The Industrial Machinery Tax Credit is available to businesses in qualified industries that purchase industrial machinery. The credit amount is equal to 1–10% of the cost to purchase, install, and repair the machinery.
Companies in the following industries are eligible to apply for the credit: manufacturing, warehousing and distribution, research and development, headquarters, and call centers.
Learn more about the credit here.
Headquarters Sales Tax Credit
Companies that qualify as Headquarters enterprises can get a sales tax credit for making capital investments and hiring within Tennessee. The credit is 6.5% of the state sales tax for qualified personal property directly related to creating new full-time jobs.
To qualify, headquarters companies need to invest at least $10 million into their business growth and create at least 100 new full-time positions that pay 150% of the state’s average occupational wage. See all the details here.
Qualified Production Franchise Excise Tax Credit
The Tennessee Entertainment Commission offers production companies a tax credit for setting qualified projects in the state and incurring expenses. Production companies can get a franchise and excise tax credit equal to 40–50% of their qualified in-state spending. The credit should be applied against the production’s resident and non-resident payroll expenses.
Here are the requirements to qualify:
- Spend at least $50,000 on post-production
- Spend at least $100,000 on non-scripted productions, video games, animation, and commercials
- Spend at least $500,000 on scripted TV and commercials
Get more information on the credit and how to apply here.
Music Scoring Incentive Program
The Tennessee Entertainment Commission also has a music scoring grant available to companies creating original scores for film. TV, animation, commercials, gaming, and multimedia projects in Tennessee. The grant is equal to 25% of a company’s qualified Tennessee expenditures, up to $500,000.
To qualify, you have to spend a minimum of $50,000 on primary markets or $25,000 on secondary markets. Learn how to apply here.
Business tax exemptions in Tennessee
Tennessee gives certain companies sales and use tax exemptions on specific business purchases. Here are the industries that qualify:
- Manufacturing: Registered manufacturing facilities can get exemptions on purchases of industrial machinery, repair parts, and industrial supplies used in the manufacturing process. They can also take a sales tax reduction on water, gas, electricity, and other types of energy.
- Warehouse and distribution: Companies that invest at least $10 million within three years can take a sales tax exemption on material handling and racking systems purchased for a qualified warehouse or distribution center.
- Call centers: Companies with at least 250 positions actively engaged in call center activities can get an 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: Companies can get a sales tax exemption on purchases of certain hardware and software, as long as they make a minimum capital investment of $100 million and create 15 new full-time positions paying at least 150% of the state’s average occupational wage.
- Research and development: Registered research and development (R&D) facilities can get a sales tax exemption on equipment purchases central to their R&D activities.
- Production: Qualified film and TV production companies working in Tennessee can get a sales and use tax exemption on the sale, use, storage, and consumption of tangible personal property, computer software, and services necessary for productions within the state.
Tennessee city and county tax credits
Many cities in Tennessee have their own business incentive and tax credit programs. Nashville’s Fast-growing Business Incentive, for example, gives businesses modest cash grants for hiring new employees.
Review your city’s website to learn about your options here.
Business financing in Tennessee
Tennessee’s resources don’t stop at business tax credits—the state also has a variety of business loans and grants for operations of all sizes. If you need funding, start by browsing Gusto’s guide to grants and loans in the Volunteer State.
