Department of
Economic & Community Development
Matthew Kisber, Commissioner

As part of a comprehensive energy strategy, Tennessee offers certified green energy supply chain manufacturers and campus affiliates, integrated customers, and integrated suppliers of a certified green energy supply chain manufacturers a Green Energy Tax Credit against the total F&E liability. A “certified green energy supply chain manufacturer” means any manufacturer that has made, during the investment period, a required capital investment in excess of $250 million in a facility certified by the State to be a facility engaged in manufacturing a product that is necessary for the production of green energy. The Green Energy Tax Credit is equal to the amount by which the charge for electricity sold to the green energy supply chain manufacturer, campus affiliate, integrated customer or integrated supplier exceeds the charge that would have been made for such total delivered electricity if the maximum certified rate had been applied during the applicable year. To the extent that any amount allowed as a credit for any tax year exceeds the combined F&E liability, the amount of excess will be deemed as an overpayment of tax and will be refunded to the taxpayer. The Tennessee Valley Authority (TVA) has agreed to supply necessary information to the Commissioner of Revenue to determine the amount of the credit.

A certified green energy supply chain manufacturer and any campus affiliates are eligible for a credit against the total F&E liability in an amount equal to any carbon charges incurred by or imposed directly on the certified green energy supply chain manufacturer, campus affiliate or imposed on the TVA or energy supplier and billed on a certified manufacturer or campus affiliate’s energy bill. Any tax credit which cannot be used to benefit a certified manufacturer or campus affiliate during the applicable tax year may be returned to the taxpayer in the form of a cash overpayment. TVA has agreed to supply necessary information to the Commissioner of Revenue to verify the amount of the credit.

If a manufacturer obtains a certificate from the Tennessee Department of Environment and Conservation certifying that the company’s purchase of pollution control equipment is necessary to comply with state, federal or local law and the equipment will result in the reduction of pollution in the water or air or the elimination of hazardous wastes, the equipment will be taxed at salvage value for the purposes of calculating local tangible personal property tax. The certificate will also exempt the equipment from all sales and use tax and allow the company to exclude it from the company’s franchise tax base.

The Tennessee Clean Energy Future Act of 2009 made the clean energy technology sector eligible for a sales and use tax credit for emerging industry. This sales and use tax credit is available to taxpayers that establish a qualified facility to support an emerging industry in Tennessee with a minimum capital investment of $100 million and the creation of at least 50 new full-time jobs paying 150% of Tennessee’s average occupational wage. The credit is equal to 6.5% of the 7% state sales and use tax paid to Tennessee on the sale or use of qualified tangible personal property.

Administered by the Tennessee Department of Transportation (TDOT), this program assists retail vehicle fuel stations and farm co-ops with up to 80 percent of the costs to convert or install storage and fuel dispensing equipment for E85 and B20 pumps, with a cap of $45,000 per pump. TDOT advertises biofuels station locations on the Official State Map and provides the option of interstate signage at exits with participating biofuels stations. This program is working to establish a statewide network of E85 and B20 pumps along interstate and major highway corridors to make these fuels available to citizens, travelers and fleets.

Tennessee offers a reduced sales tax rate on manufacturers' use of energy fuels and water (1.5% instead of 7%).