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Tax Incentives

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Now that your company has chosen the perfect Memphis site, the One Stop Shop team works together to make sure your operating costs are low. Companies that bring quality jobs and investment into the Greater Memphis region are eligible for state and local tax incentives. Browse the available incentives below and contact us if you have any questions.

State Tax Incentives

State Tax Incentives

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.

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.

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 credit 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. Requires investment of $10M and 100 net new full time positions each paying 150% of the State’s average occupational wage. 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 $100M and 15 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.

Research and Development: Sales tax exemption on certain equipment used in research and development. Equipment must be necessary to and used primarily for research and development purposes.

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.

Local Tax Incentives

Local Tax Incentives

Projects involving large capital investment and high levels of job creation may qualify for a property tax freeze. Property taxes are frozen at the pre-development level. Memphis and Shelby County’s Economic Development Growth Engine (EDGE) offers several PILOT programs designed for firms looking to expand or relocate in Memphis and Shelby County. These programs are designed for projects that will manufacture, assemble, process, fabricate and distribute agricultural, mining, biomedical, electronics, food, chemical, alternative fuels, automobiles or other products. Distribution, office, service facilities, pollution control, tourism and other non-retail commercial projects qualify as well. All PILOTs require contracting goals of at least 25% of hard construction costs and 15% of total PILOT savings spent with certified MWBE/LOSB vendors.

Jobs PILOT [up to 15 years]: Creation of 15 or more FTE jobs and a minimum capital investment of $1,000,000 is required.

Fast Track PILOT [up to 10 years]: Creation of 25 or more FTE jobs and a minimum capital investment of $1,000,000 is required.

Expansion PILOT [up to 15 years]: Designed for projects currently operating in Shelby County for at least 10 years prior to application. Creation of 15 or more FTE jobs and a minimum capital investment of $1,000,000 is required.

Community Builder PILOT* [up to 15 years]: Designed for projects located in distressed areas within the Memphis city limits and unincorporated Shelby County. Creation of 15 or more FTE jobs and a minimum capital investment of $1,000,000 is required.

*Residential housing, pawn shops, adult entertainment stores, liquor & tobacco stores, payday loan and car dealerships are not eligible. To find out more or begin the application process, visit www.growth-engine.org

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.

The Downtown 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.

Other Resources

Click below to download these resources as PDFs.

Questions? Click here to email Mark Herbison or call 901-543-3516.

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