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Taxes

State of Tennessee

Corporate Income or Excise Tax
Franchise Tax
Sales and Use Tax
Property Tax
Personal Income Tax
Unemployment Compensation Taxes


Jefferson County

Local Property Tax
Local Sales Tax

Business or Gross Receipts Tax
 

Corporate Income or Excise Tax
Tennessee levies an excise tax of 6.5 percent on net earnings of corporations, foreign and domestic, arising from business done within the state, or on state apportionment of total earnings of interstate corporations. All taxes are deductible in determining the state excise tax base except the Tennessee excise tax and income taxes paid to the federal government or foreign governments.
 

Special features of the excise tax include:
• Receive Excise tax credit equal to 1 percent of: 

  • The purchase, installation and/or repair of qualified industrial machinery.
  • The purchase of telephone equipment and telephone units, computers, software  and any peripheral devices purchased to reach the required capital investment to qualify for the Jobs Tax Credit.
  • Warehouse and distribution, which qualifies under the sales and use tax law, can apply for the 1 percent excise tax credit.
  • Total tax credit for one year cannot exceed 50 percent of the company's tax liability. Companies can carry over excess credit for 15 years.

• Net operating losses may carry forward 15 years.
• All capital losses may be claimed the year they are incurred.
• All taxes are deductible in determining the state excise tax base.
 

For more information, please contact the Tennessee Department of Revenue, Taxpayer Services Division, at 615-253-0600 or visit http://www.tennessee.gov/revenue.
 

Franchise Tax
The Tennessee franchise tax is an asset-based tax applied to foreign and domestic corporations doing business in the state (including business trusts, regulated investment companies, limited liability companies and limited partnerships).  

 

Exempt organizations include nonprofit, welfare and "industrial development" corporations, building and loan associations, production credit associations, credit unions and investment companies.

The tax basis is outstanding stock, surplus and undivided profits, apportioned to the state at the close of the last fiscal year.
In the state of Tennessee, the franchise tax is computed in one of two ways, whichever results in a higher tax:
 

  1. The equity method, which includes the taxpayer's net worth (total assets minus total liabilities).
  2. The book value method, which includes the book value of all real and tangible property owned or used in Tennessee.

 

The basis cannot be less than the book value of property owned, plus the value of property rented, which is determined by multiplying net annual rental by eight for real property, by three for machinery and equipment, by two for office furniture and equipment and by one for delivery and mobile equipment.

The tax rate is 25 cents per $100 of the basis. The due date is the 15th day of the fourth month following the close of the corporation's fiscal year. Franchise and excise taxes are computed together, reported on the same form and paid at the same time.

Special features of the franchise tax include:

• Property erected in Tennessee by the corporation in compliance with air, water or hazardous waste pollution regulations is exempt from the franchise tax.
• A jobs tax credit was enacted that credits $4,500 for each new full-time job created during a fiscal year. Additional details are listed in the "Incentives" section.
• Purchases of industrial machinery allow corporations a 1 percent credit against the tax.
• A 1994 incentive allows up to $25,000 in credit against the tax for development of child care facilities for employees of a business.
• The sales factor is double-weighted for the excise apportionment formula (property, payroll and sales).


No franchise tax on:

• Finished goods inventory over $30 million
• Property under construction, not being utilized by the company
• Pollution control equipment
• Property rented from an industrial development board (may be capitalized on the company books)

For more information, please contact the Tennessee Department of Revenue, Taxpayer Services Division, at 615-253-0600 or visit www.tennessee.gov/revenue.

Sales and Use Tax
The sales tax applies to any person or company that manufactures, distributes or retails tangible personal property within the state. Many services are also taxable.

Specific areas include:

• Creation of custom computer software for business
• Leases or rentals of tangible personal property unless the owner provides a crew to operate the leased item
• Fabrication of items for consumers who furnish raw materials
• Mail-order sales
• Self-produced property (raw materials) severed, manufactured or compounded from the earth

The basis used to determine the tax rate is the price of the tangible property sold at retail. Any business liable for collection and payment of the sales and use tax is required to register with the Tennessee Department of Revenue. For more registration information, call 800-342-1003.

The sales and use tax rate throughout Jefferson County totals 9.75 percent (7 percent state plus 2.75 percent local option). No sales tax is paid on or by the following:

• Purchases, installations and repairs of qualified industrial machinery
• Raw materials for processing
• Air and water pollution equipment for manufacturers (other air and water pollution equipment may be eligible for a sales tax credit)
• Any materials that become a component part of the finished product
• Purchases of material handling and racking equipment by a distribution or warehouse facility (to qualify, the taxpayer must invest in building and equipment in excess of $10 million over a period of three years or less)
• Many 501(c) organizations

Additional Sales Tax Benefits:

• Reduced sales tax rate (1.5 percent) for manufacturers' use of energy fuel and water (tax-exempt if used directly in the manufacturing)
• Refund on taxes paid on goods and services by motion picture production companies filming or producing in Tennessee (requires expenditures of $500,000)

Sales Tax Items with Discounted Rates for Manufacturers

 

Type of Tax

State 

Local 

Total

Energy/Fuel  

1.50% 

0% 

1.50%

Water  

1.00% 

.50% 

1.50%


For more information, please contact the Tennessee Department of Revenue, Taxpayer Services Division, at 615-253-0600 or visit www.tennessee.gov/revenue.

 

Property Tax
The State of Tennessee does not have a property tax and property tax rates in Jefferson County are competitive and straightforward. Special features include:

• No property tax on goods-in-process
• No property tax on finished goods inventories in hands of manufacturers
• No property tax on inventories of merchandise for sale
• No property tax on goods-in-transit (freeport)
• No property tax on pollution control equipment required for compliance with federal, state or local environmental protection laws
• Attractive depreciation schedules

 

Click Here to view local property tax rates in Jefferson County.
 

 

Personal Income Tax

Tennessee does not tax earned personal income. A six percent (6%) tax is levied on dividends and interest received by individuals or other entities, including partnerships and trusts. The first $1,250 on an individual tax return and $2,500 on a joint return are exempt from the tax.
 

Unemployment Compensation Taxes

Unemployment insurance provides benefits to unemployed workers who have lost their jobs through no fault of their own. The Tennessee Department of Employment Security administers the state insurance program.

All employers are subject to the tax except self-employed persons who are also a sole employee, sole proprietorships without employees or general partners who are not liable for the premiums.

Tax is paid by employers only and cannot be deducted from employee’s wages. The Tennessee tax portion serves as a credit against a portion of any federal taxes owed for unemployment insurance.
 

Tax Rates:

• State tax rate is 2.7 percent for most new employers to Tennessee.
• After three full calendar years, the employer is evaluated and a tax rate is assigned. Employer’s history of taxes and benefits paid to lay-off determines the tax rate. 
     - Minimum rate: 0%
     - Maximum rate: 10%
• Minimum Tax Rate 0.15 percent – 0 percent with a reserved ratio of 20 percent or more
• Estimated average tax rate is 1.7 percent of total wages
• Tax paid is based on first $7,000 of wages of each employee. Taxable wages include: salaries, commissions, bonuses, tips, vacation and severance pay. Non-taxable payments include: payments made by employer for insurance, retirement, or annuities.
• Unemployment compensation taxes are paid on a calendar-year basis regardless of the employer’s fiscal year. Reporting - New employers must file an initial report to determine their taxpaying status and receive their Tennessee account number.


Jefferson County Taxes 


Jefferson County Tax Rates: Real property tax, personal property tax, and sales taxes are the only local levies made. There are no separate taxes for schools, hospitals, or other improvements.


Jefferson County Property Tax Rates

 

 

Tax Rate

Per $100

of Assessed Value

Business Real

Assessment

Business Personal

Assessment

Residential

Assessment

Jefferson County $2.35 40% 30%  25%
Baneberry $0.8242 40% 30% 25%
Dandridge $0.9890 40% 30%  25%
Jefferson City $1.15 40% 30% 25%
White Pine  $1.18 40% 30% 25%

Updated  tax rate values June 30, 2015

To calculate the tax on a property, multiply the ASSESSED VALUE (appraised value x assessement ratio) by the TAX RATE. Residents of the incorporated municipalities pay both city and county property tax. 

Example: A home appraised for $100,000 in Jefferson County would pay: $25,000 (assessed value = $100,000 x 25%) ÷ 100 (property taxes are paid per hundred of assessed value) X 2.15 (tax rate) = $537.50 per year in taxes.”

 
 

Local Sales Tax

Local Sales Tax (all jurisdictions):  2.75%
State Sales Tax: 7.00% on all other tangible personal property unless specifically exempted 6.00% on food and food ingredients.State (7%) + county (2.75%) = 9.75%
 

* Wheel Tax: $25 per vehicle; motorcycle tax: $15
* No State income tax
* Hotel/Motel tax: 4%


Business or Gross Receipts Tax

Local governments in Tennessee levy a tax on gross receipts of specified types of businesses including retailers, wholesalers, persons performing services and contractors. The tax is levied as a substitute for a property tax on inventories. All businesses must register with the Jefferson County court clerk within twenty (20) days of beginning business in Tennessee to pay the business license tax. At this time the clerk will assign the business a classification and gross receipts tax rate. Thereafter, the business pays the annual filing fee with the annual payment of the gross receipts tax. The tax rate varies from 3/8 to 1/40 of 1 percent of gross receipts with manufacturers and certain professionals exempt from taxation. The minimum tax burden is the $22 annual license fee and recording fee.
 

If a business is located within the city limits of a municipality, the business is also required to hold a city license. The city license can be obtained at city hall. If the business has gross receipts totaling $3,000 or less, the business is not subject to hold a business license. However, they must have an exemption statement on file.


Special features of the tax include:
 

• Finance charges segregated in billing are excluded from tax
• Consumer tax (such as sales tax) is exempt from the tax


Deductions from the tax include:
 

• Local, state and federal excise taxes paid
• Contractors' payments to subcontractors
• Sales made or services performed in interstate commerce
• Cash discounts, trade-ins, refunded deposits, returned merchandise


For information on the business tax in Jefferson County, contact the Jefferson County Clerk's office at 865-397-2935.