Forest ProductsTax Credit Sourcebook

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.

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