Tennessee · Investment / Equipment · TN-IMC-001
Industrial Machinery Tax Credit
Publication revised September 24, 2026. Sourcebook page 253.
Credit amount / calculation
Generally 1% of qualified industrial machinery investment, with enhanced rates for very large projects; 25-year carryforward.
Business fit and eligible activity
Foundational manufacturing credit for qualified industrial machinery. Qualified investment or approved project activity; confirm eligible property, location and taxpayer type.
Eligibility and practical use
For a mill owner, the practical question is what property the statute treats as qualified investment. Production machinery is usually the first place to look; buildings, electrical work, software, mobile equipment, and used machinery require closer reading. Logging equipment deserves a separate eligibility check because mobile harvesting property may be treated differently from machinery used at a manufacturing site.
Illustrative business benefit
A sawmill invests $2.40 million in qualifying production machinery. At 1%, the nominal credit is $24,000 before annual caps, tax-liability limits, carryforward rules, or negotiated adjustments. The company should isolate eligible machinery from buildings, vehicles, land, and other costs that the statute does not treat the same way.
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Get a written answer on which property is qualified - especially buildings, installation, software, used equipment, vehicles, and mobile machinery.
Official sources
- State of Tennessee — OpenECD (tn.gov)
Related programs
Enhanced Job Tax Credit
per-job benefit based on county tier
Projects in designated enhancement counties can receive additional per-job credits and lower thresholds.
Job Tax Credit
Generally
Manufacturers investing and creating qualifying jobs can receive a per-job franchise/excise credit.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Clean Electricity Production Credit (Internal Revenue Code §45Y)
Production-based
Alternative to the investment credit for owners/operators of qualifying clean-electricity facilities; potentially relevant to qualifying on-site generation.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.