Franchise Taxes
The Tax - Franchise tax is based on issued and outstanding stock, surplus and undivided profits apportioned to Tennessee at the end of the company's fiscal year. Franchise tax applies to foreign and domestic businesses doing business in Tennessee, including business trusts, regulated investment companies and limited liability companies.
Tax Rate - Franchise tax: $0.25 per $100 with a minimum tax of $100.
The franchise tax is computed in one of two ways, whichever results in a higher tax:
Tax Incentives and Exemptions
No franchise tax on:
The sales factor is double-weighted for the excise apportionment formula (property, payroll and sales).
See Excise Tax for information on the Jobs Tax Credit.
Tax Rate - Franchise tax: $0.25 per $100 with a minimum tax of $100.
The franchise tax is computed in one of two ways, whichever results in a higher tax:
- The equity method includes the taxpayer's net worth (total assets minus total liabilities).
- The book value method includes the book value of all real and tangible property owned or used in Tennessee.
- Insurance companies may deduct gross premium taxes from the sum of franchise and excise taxes.
Tax Incentives and Exemptions
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 corporate books.
The sales factor is double-weighted for the excise apportionment formula (property, payroll and sales).
See Excise Tax for information on the Jobs Tax Credit.