08.14.14 |
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Tennessee Offers Industrial Machinery Credit

TMachine 2he Tennessee Department of Economic and Community Development is currently offering the Industrial Machinery Credit for machinery purchased, rented or leased during the tax year and located in Tennessee. Companies that qualify for the credit will earn between 1% and 10% of their investment in the form of franchise and excise (F&E) tax credits, which can offset up to 50% of F&E taxes in any given year and be carried forward for up to 15 years.

The Industrial Machinery Credit applies to the purchase, installation and repair of industrial machinery necessary to, and primarily for, fabricating or processing tangible personal property for consumption off the company premises, as defined in T.C.A. 67-6-102. Industrial machinery may include computer software, systems, networks and hardware when the investment either qualifies for Tennessee’s Jobs Tax Credit or is a part of a qualified data center investment.

To qualify for the credit, businesses must make a capital investment of $10 million in a new or existing building or equipment in a period of less than three years. To determine eligibility, a manufacturer must file a business plan and application with the Tennessee Department of Revenue and receive a unique industrial machinery number. The Industrial Machinery Credit is available whether the company is creating jobs or not.

The percentage of Industrial Machinery Credit allowed to any business is dependent upon the capital investment made during the investment period as follows:

Capital Investment

Percentage of Credit

Less than $100,000,000

1%

$100,000,000

3%

$250,000,000

5%

$500,000,000

7%

$1,000,000,000

10%

 

Any unused Industrial Machinery Tax Credits may be carried forward for up to 15 years. The investment period for the credit is three years, but may be expanded to five years for businesses investing less than $1 billion and to seven years for businesses investing $1 billion or more.


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