• Property Tax
• Income Tax
• Sales Tax
• Corporate Excise Tax
• Corporate Franchise Tax
• Unemployment Compensation Tax
• Workers Compensation Insurance
• Initial Corporate Organization Fee
• Local Business Tax
• Motor Vehicle Registration Fees and Taxes

Property Tax

In Tennessee, cities and counties levy real and personal property taxes. In 2006, the tax rates for Collierville and Shelby County total $5.07 per $100 assessed market value.

Tax Rates:
Collierville	Shelby County
$1.28	$4.09
Assessment Ratio (%)
Industrial and Commercial real property	40
Industrial and Commercial personal property	30
(Including production equipment and raw materials inventory)
Residential and Farm property	25
Principal Exemptions:
Manufacturers:	Finished Goods Inventories
Other Businesses:	All Inventories of Merchandise for Sale

Income Tax

Tennessee does not tax earned income. A tax is levied on dividends and bond interest received by individuals or other entities, including partnerships and trusts. The Hall Tax of 6% applies to interest and dividends. All persons living in or companies doing business in Tennessee for more than 6 months must pay this tax.

The first $1,250 on an individual return and $2,500 on a joint return are exempt from the tax.

Sales Tax

The sales tax or services tax applies to any person or company who manufactures, distributes, or retails tangible personal property within the state. The sales tax law places the legal incidence of tax upon the seller. The Tennessee state sales tax is 7% and the local sales tax is 2.25%.

The basis for the sales and use tax is the sale price of each item or article of tangible personal property sold at retail; cost price of each article used, consumed or stored for use in Tennessee; lease price of tangible personal property including accounting equipment, cars, and trucks, and manufacturing equipment; hotel and motel room charges; parking lot storage of motor vehicles; alcoholic beverages and tobacco products; telephone, telegraph, and electricity; repair and installation of personal property; and amusement and sporting events.

SALES TAX EXEMPTIONS

The sales tax rates for manufacturers' use of energy fuel and water are reduced to 1.5%.

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 the franchise and excise taxes.

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

• State law allows corporations purchasing industrial machinery to take credit against the excise tax equal to 1% of the purchase price. 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 fifteen (15) years.
• Tennessee allows a corporation to claim all its capital losses in the year incurred with no carryback or carryover.

The tax is due on the first day of the fourth month following the close of the corporation's fiscal year.  Franchise and excise taxes are reported on the same form and paid at the same time.

Corporate Franchise Tax

The franchise tax rate is based on the issued and outstanding stock, surplus, and undivided profits, apportioned to Tennessee, at the end of the fiscal year. The franchise tax rate is $.25 per $100 with a minimum tax of $100. The basis of this tax cannot be less than the book value of the property rented in Tennessee. The value of property rented is determined by multiplying net annual rental times either (8) for real property, three (3) for machinery and equipment, two (2) for office furniture and equipment, and one (1) for delivery or mobile equipment.

The franchise tax applies to foreign and domestic corporations doing business in Tennessee, including business trusts and regulated investment companies. General welfare, non-profit, welfare, and "industrial development" corporations, are exempted from the franchise tax. Insurance companies doing business in Tennessee may deduct gross premium taxes from the sum of the franchise and excise taxes. In computing the minimum basis of the franchise tax, the following incentives apply:

• Property under construction and not being utilized by the corporation.
• Property rented by the corporation from an industrial development corporation may instead be valued by capitalizing it on the corporate books.
• Property erected in Tennessee by the corporation for compliance with air, water, or hazardous waste pollution regulations.

For corporations doing business within and without Tennessee, the capital stock, surplus, and undivided profits are to be apportioned for franchise tax purposes by a three factor formula consisting of property, payroll and sales.  The corporation's net earnings are apportioned by the same three-factor formula to determine its excise tax liability.

Unemployment Compensation Tax

The Division of Employment Security within the Department of Labor and Workforce Development collects the state unemployment premiums and pays unemployment benefits to unemployed workers.

The new employer rate is 2.7% except in industries with high turnovers which have new employer rate based on the reserve of the industry. Through June 30, 2002, mining and construction have been the only industries assigned a higher new employer rate.

 Workers Compensation Insurance

Though not a "tax", worker's compensation is an important business cost. Tennessee's Worker's Compensation Law is administered by the Tennessee Department of Labor, Division of Worker's Compensation. For additional information, contact the Department of Commerce and Insurance 615-741-1756.

Initial Corporate Organization Fee

Filing and maintaining corporation, limited liability company, limited partnership, limited liability partnership, and general partnership documents that are authorized by law to be filed with the Secretary of State; information about and certification of business documents on file; certificates of existence, authority and registration. You may contact us directly by e-mail or by phone at (615) 741-2286 if you have questions.

Corporations, profit and non-profit, are required to file an annual report and pay a fee of $20 with the Tennessee Secretary of State's Office. For more information, contact the Tennessee Secretary of State at (615) 741-0529.

Local Business Tax

The business tax is administered by the state Department of Revenue but collected and imposed by local governments. The owners and operators of most for-profit businesses must pay the local business tax for each place of business located in either the county or the city that imposes the business tax.

Businesses are grouped into four classifications with rates varying in Collierville from 1/8 of 1% for retail sales to 1/60 of 1% for wholesale sales. Personal property taxes are deductible from gross receipts tax figures. Businesses exempted include; manufacturers, certain blind persons, and the services of certain professionals.

Motor Vehicle Registration Fees and Taxes

Passenger Cars (Collierville) $94

For more information, contact Titling and Registration Division, Tennessee Department of Safety at (615) 741-3101.