Business Tax in Tennessee
The Tennessee Constitution mandates a balanced budget and forbids deficit financing for government operations.  This "pay as you go" plan means that new businesses and individuals moving to Tennessee will never be taxed by the state to pay for old debts.  Tennessee taxes as a percent of personal income was second lowest for all States in the Southeastern region and 17% lower than the U.S. rate.  Tennessee’s per capita taxes of $1,106 in Fiscal 1994 was second lowest among southeastern states and 23% lower than the U.S. rate.  Tennessee offers a tax structure that is competitive and provides a cost effective place to live and operate their businesses.  The following summarizes taxes and incentives of interest to corporations:

 

Summary of Tennessee Business Taxes

 

Tax

State

Local

Corporate/Excise

6.5%

None

None

Franchise

$0.25 per $100

None

None

Sales and Use

7.0%

1.0%-2.75%

None

General Property

None

$.10-$3.89/ $100 of assessment (city)
$1.42-$5.17/ $100of assessment (county)

None

Initial Corporate Organization Fee

None

$100-$600

None

Utility Gross Receipts

None

3.0%

None

Income Tax

None

6.0% of interest, dividends

None

Unemployment Insurance

None

2.7% new employers

None

Most Manufactor pay

None

7.5%

None

Local Business Tax

None

Up to 1/8 of 1.0% gross sales

None

Source:  Tennessee Department of Revenue & Tennessee Department of Economic & Community Development

 Comparative Tax Burden

 

State Taxes  Per Capita

State Tax

Collections

(Billions)

Personal Income

(Millions)

Population

(Million)

Tennessee

$1,345

$7.8

$153.6

5.7

South Carolina

1,400

5.8

99.9

4.0

Florida

1,485

24.8

467.2

16.0

Virginia

1,752

12.8

232.1

7.1

Georgia

1,609

13.8

238.4

8.2

United States

1,854

533.4

8,621.0

292.2

Alabama

1,533

6.9

109.0

4.5

Louisiana

1,639

7.4

107.6

4.5

North Carolina

1,867

15.5

224.5

8.1

Mississippi

1,647

4.7

61.9

2.9

Kentucky

1,948

8.0

101.9

4.0

Arkansas

1,858

5.0

61.7

2.7

West Virginia

1,971

3.6

41.0

1.8

Source:  Bureau of Economic Analysis, Survey of Current Business

 
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