Tennessee Enhanced Job Credit Guidance

A letter ruling issued by the Tennessee Department of Revenue discusses the enhanced job tax credit against the corporate income and franchise taxes where the taxpayer has added headquarters staff jobs. The compensation requirement for each qualified job created by the taxpayer for purposes of the additional annual job tax credit was at least 150% of Tennessee's average occupational wage for the month of January of the year in which the job is created. The taxpayer could claim the $5,000 “basic” job tax credit in the tax year in which it made the required capital investment and created a total of 25 qualified jobs, provided that the investment was made and the jobs were created within 12 months of the effective date of the business plan. Where the taxpayer met the statutory requirements, the taxpayer was also allowed to claim the $5,000 additional annual job tax credit for a period of three years beginning with the first tax year after the initial job tax credit was created. The “basic” job tax credit could not exceed 50% of the taxpayer's combined Tennessee corporate income and franchise tax liability shown on the return before any credit is taken. Nevertheless, the additional annual job tax credit could be used to offset up to 100% of the taxpayer's Tennessee franchise and excise tax liability for that year.