Corporate Excise Tax

Tennessee levies an excise tax of 6% on net earnings of corporations, foreign or domestic, from business conducted in the state, or on state apportionment of total earnings of interstate corporations.

All taxes are deductible in determining the state excise tax base, except Tennessee excise taxes and income taxes paid to the federal government or a foreign government. General welfare, non-profit, and industrial development corporations are exempted from the excise tax. Insurance companies doing business in Tennessee may deduct gross premium taxes from the sum of franchise and excise taxes.

The following incentives apply to Tennessee's corporate excise tax:

State law allows corporations purchasing industrial machinery to take a credit against the excise tax equal to 1% of the purchase price and equipment associated with the required capital investment by a distribution or warehouse facility. To qualify, the taxpayer must invest in building and equipment in excess of $10 million over a period not exceeding three years. Computer equipment purchased in the process of qualifying for the franchise tax jobs credit is also eligible for the excise tax credit. The total tax credit for any one-year cannot exceed 50% of the corporation's tax liability, but the corporation may carry excess credits over for 15 years.

A corporation having a net operating loss may carry that loss forward up to 15 years.

Tennessee allows a corporation to claim all its capital losses in the year incurred with no carryback or carryover.