Below is a brief overview of tax incentive programs available to relocating or expanding businesses in Memphis and Shelby County. Download more detailed descriptions of each program by clicking on the links to the right.
Need assistance determining which incentives are right for your business? The Greater Memphis Chamber’s economic development professionals can help. Give us a call.
State Tax Incentives
Jobs Tax Credit
Provides a credit of $4,500 per job to offset up to 50% of franchise and excise tax (F&E) liability in any given year, with a 15 year carry-forward. Companies must create at least 25 net new full-time jobs and invest at least $500,000 in a qualified business enterprise within a 36 month period.
Industrial Machinery Tax Credit
A credit of 1% to 10% for the purchase, third party installation, and repair of qualified industrial machinery. Qualified expenditures may include:
Manufacturing:Purchases for machinery; apparatus and equipment with parts; appurtenances and accessories; repair parts and labor.
Warehousing and Distribution: Material handling equipment and racking systems with a minimum $10M capital investment within 36 months.
Headquarters and Call Centers: Computers; networks; software or peripheral computer devices purchased in making required capital investment for job tax credit.
Sales and Use Tax Exemptions
Manufacturing: Sales tax exemption for industrial machinery and reduced sales tax rate for utilities at qualified manufacturing facilities. Exemptions may include industrial machinery, repair parts, and industrial supplies used in the manufacturing process. Reductions may include: 0-1.5% tax on water depending on use and 0-1.5% on gas, electricity, and various energy sources, depending on use.
Warehouse & Distribution: Sales tax exemption for material handling and racking systems purchased for a qualified warehouse or distribution facility. Requires investment of $10M or more, including the purchase of qualified equipment, made during a 3 year period.
Headquarters: State sales tax exemption for qualified personal property purchased for a qualified headquarters facility. Investment period begins one year prior to construction / expansion and ends one year after construction / expansion has concluded, but can be extended to six years with permission from the State. Qualifying headquarters receive a non-expiring sales tax credit for 6.5% for qualified personal property directly related to the new full-time job creation.
Call Centers: Tax exemption on any sales of interstate telecommunication and international telecommunication services sold to a business for use in the operation of one or more qualified call centers. Must have at least 250 jobs engaged primarily in call center activities.
Data Centers: State sales tax exemption for certain hardware and software purchased for a qualified data center. Minimum capital investment of $250M and 25 net new full-time jobs paying at least 150% of the State’s average occupational wage; investment must be made during a three year period, but can be extended to five years for investments under $1B or seven years for investments exceeding $1B with the State’s permission.
Sales Tax Reduction on Utilities
Electricity and natural gas are normally taxed at the rate of 7.0%; water is taxed at the combined rate of 9.25%. However, manufacturers may be granted a reduced rate of 1.5% for industrial machinery or a full exemption if the energy fuel or water comes in contact with the product.
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Local Tax Incentives
Memphis/Shelby County Payment in Lieu of Tax (PILOT)
Projects involving large capital investment and high levels of job creation may qualify for a property tax freeze. Approval is based on a variety of performance standards, including the number and type of jobs created, annual base wage, capital investment in real and personal property, and the location of the project. Property taxes are frozen at the pre-development level. To find out more or begin the application process, visit www.growth-engine.org.
Foreign Trade Zone Designation
Memphis’ Foreign Trade Zone Program can provide businesses engaged in international trade with significant advantages, including lower duties, reduced processing fees and quicker movement of goods. Goods can be stored, processed, manipulated and integrated with domestic goods, all before paying duties. The Memphis and Shelby County Office of Economic Development administers a General Purpose Foreign Trade Zone and assists companies with establishing subzones. To find out more, visit: www.growth-engine.org.
Millington/Shelby County Payment in Lieu of Tax (PILOT)
Projects involving large capital investment and high levels of job creation may qualify for a property tax freeze. Formal approval for all PILOT applications is determined by the Millington Industrial Development Board. Approval is based on a number of performance standards, including the number and type of jobs created, annual base wage, capital investment in real and personal property, and the location of the project. Property taxes are frozen at the pre-development level.
The PILOT program is a financial incentive that is designed to encourage commercial real estate development in and around the Central Business Improvement District by "freezing" property taxes at the predevelopment level for a predetermined period of time. To be eligible for a PILOT, the value of the building renovations, site improvements or new construction must be equal to or greater than sixty percent (60%) of the total project cost.
The program is administered by the Center City Revenue Finance Corporation through an application and review process. Please visit CRFC webpage for more information.
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