Incentives & Taxes Oak Ridge businesses have one of the lowest per capita tax burdens in the U.S. There is no state tax on personal income or property and several tax incentives help companies to operate more profitably. Tax Tennessee Oak Ridge Corporate Excise 6.5% None Franchise $0.25 per $100 None Sales & Use 7% (some exclusions apply) 2.75% General Property* None City: $2.52 per $100 Anderson: $2.59 per $100 Roane: $2.35 per $100 Personal Income No tax on earned income; 6% on interest, and stock or bond dividends None Initial Corporate Organization Fee $100 - $600 None Unemployment Insurance 2.7% new employers None * Ratio Assessment: Residential 25% Industrial 40% Personal (Equipment) 30% TENNESSEE STATE TAX STRUCTURE Franchise Tax Finished goods inventory in excess of $30 million may be excluded Pollution control equipment is exempt Property under construction and not being utilized is not included Property rented from the industrial development corporation may be valued by capitalizing it on the books Excise Tax Tax is based on the net earnings of the company derived from the business in Tennessee Tax rate is 6.5% All capital losses claimed in the year incurred Net operating losses can be carried forward for 15 years Three factor, double weighted apportionment formula Tennessee does not have the throwback provision Property Tax No state property tax Sales and Use Tax 7% state sales tax plus the applicable local rate (2.25%-2.75%) on any person or company who manufactures, distributes or sells tangible personal property within the state. No sales tax is levied on: No sales tax on purchases, installation and repairs of qualified industrial machinery No sales tax on raw materials for processing No sales tax on pollution control equipment for manufacturers Reduced sales tax rates for manufacturers' use of energy fuel and water (1.5% vs. 7%) No sales tax on qualified industrial supplies. No sales tax on containers, packaging and wrapping materials No state tax on personal income INCENTIVES - STATE OF TENNESSEE Since Governor Haslam took office in 2010, one of his highest priorities has been the creation of higher-skilled, better-paying jobs for Tennesseans. The Department of Economic and Community Development has spearheaded that effort from the beginning. In the last year, we've been called the nation's most competitive state for business, the third-best for economic development and the most improved state for development. The stage is set for success in Tennessee. FastTrack Infrastructure Development Program (FIDP) The FastTrack Infrastructure Development Program (FIDP) funds may be used for infrastructure improvements. Funds may not be used for "speculative" projects but are restricted to situations where there is a commitment by certain private sector businesses to locate or expand in the state and to create or retain jobs for Tennesseans. Activities funded under the program will be limited to those services normally provided by local governments and their implementing agencies to businesses which are locating, expanding, or operating in Tennessee. FIDP funding is provided for, but not limited to, the following activities; water systems, wastewater systems, transportation systems, site improvements, technology systems and other improvements to the physical infrastructure required for the location or expansion of a business which creates jobs. FastTrack Job Training Assistance Program (FJTAP) The FastTrack Job Training Assistance Program (FJTAP) is available to both new and expanding businesses. FJTAP staff assists each individual company to develop customized training plans and to provide funding for components of that training. Eligibility for FJTAP support and levels of funding for training assistance are determined by: The amount of company investment The number of new hires and average hourly wage The types of skills and knowledge that must be obtained by prospective or newly hired employees Job Based Training Reimbursement (JBT) A potentially faster program for reimbursement of training costs, companies may seek reimbursement from the state once a job creation commitment and cost-per-job is established. 50% reimbursement of the cost per job within the first 90 days after the job is created. The remaining 50% can be claimed 180 days after the job is created. Multi-year contracts between company and ECD can be reached to accommodate multi-year job creation projects. Tennessee Job Skills (TJS) Similar to FJTAP, but with a focus on employers and industries which create high skill, high wage jobs in emerging, high-demand and technology focused sectors of the economy. Reimbursement rates depend on the level of training and the types of instructors utilized. Jobs Tax Credit A company locating in Oak Ridge, investing $500,000 & creating 25 new jobs, can claim a $4,500 credit against their franchise and excise tax over a period of 15 years. The percentage of tax liability companies are able to offset ranges from 33.3% to 100% based on the number of jobs created ranging from 25 to 5,000 or more. Jobs Created Amount of Credit Full-time TN Jobs Percentage Offset 25 $112,500 75 33.33% 100 $450,000 999 33.33% 500 $2,250,000 1100 50% 999 $4,495,500 3000 75% 1000 $4,500,000 5100 100% Emerging Industry Tax Credits If companies can demonstrate a strong growth potential and commit to creating jobs which pay above the county's average occupational wage, the state may waive the threshold of 25 new jobs created in order to qualify for the Jobs Tax Credit. Super Jobs Tax Credit Super Jobs Tax Credit is for those companies making capital investments in excess of $100 million and creating at least 100 jobs with the wages equal to or greater than 100% of the state average occupational wage. These credits can be used to offset up to 100% of the companies F&E tax liability, but must be taken in the first tax year after the job creation and capital investment thresholds have been met and can be taken annually. The Super Credit does not include carry-forward provisions and is available in addition to the Jobs Tax Credit. Allows companies to exempt 2/3 of the required capital investment on Schedule G of the F&E tax return. Investments must be made during a 3-year period, but can be extended to 5 years (or in the case of $1 billion investment, 7 years) at the discretion of the Commissioner of ECD. Super Credits are available at the following levels: Capital Investment Jobs Created Size of Credit per job, per year Years Available $100 million 100 $5,000 3 $250 million 250 $5,000 6 $500 million 500 $5,000 12 $1 Billion* 1,000 $5,000 20 *Projects qualifying in this category must create jobs paying 150% of the state's average occupational wage. Integrated Supplier Tax Credit Tennessee extends certain tax credits to qualified suppliers located within the footprint (footprint determined on a per project basis) of a project meeting the $1 billion investment threshold and creating 1,000 or more jobs. A qualified supplier locating within the determined footprint of such a project will qualify for a Jobs Tax Super Credit equal to $5,000 per job with a 15 year carry-forward, plus an additional $5,000 per job each year for six years. Industrial Machinery Tax Credit Credit applies to the purchase, installation and repair of qualified industrial machinery. Credit applies to the purchase and installation of computer and telephone equipment purchased in order to meet the capital investment thresholds of the Jobs Tax Credit. The credit may be used to offset up to 50% of the total franchise and excise tax liability. This credit has a 15-year carry forward. 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% Pollution Control Equipment Tax Credit If a company obtains a certificate from the Tennessee Department of Environment and Conservation certifying that the company's purchase of pollution control equipment is mandated by the state, federal or local law and the equipment will result in the reduction of pollution in the water or air or the elimination of hazardous wastes, the equipment can be taxed at a salvage value for the purposes of calculating tangible personal property tax. The certificate will also exempt the equipment from sales and use tax and exclude it from calculation of a company's franchise tax liability. City of Oak Ridge Incentives Payment-in-lieu-of-tax (PILOT) incentive The City of Oak Ridge, in conjunction with Anderson and Roane Counties, offers a payment-in-lieu-of-tax (PILOT) incentive that reduces or freezes both real and personal property tax liability for companies meeting certain criteria. The PILOT incentive is based on job creation, capital investment, wage rate and location of a given project. The incentive is based on a point system, where more points equates to a greater incentive. Bonus points are awarded for companies projecting that a certain percentage of new hires live in Oak Ridge. Extensive back-up documentation is available regarding the PILOT incentive, including policies and procedures, point criteria spreadsheet, sample MOU and application. Infrastructure Assistance The City of Oak Ridge provides infrastructure assistance to companies making a sizeable investment in the community, based on various criteria. Infrastructure assistance may include building or upgrading electrical capacity, water lines, sewer lines or roadway improvements. Also, the City may assist in providing the local match required by some of the state and federal grant programs. Fast Track Permitting For projects of considerable size, the City of Oak Ridge will provide a dedicated employee from the Community Development Department to fast track all permitting and licensing in order to expedite the process however possible. The City also is willing to discuss waving or discounting the cost of permit fees.