The change expands the credit for manufacturers, but also for companies not considered manufacturers who make equipment purchases for research and development.
For example, a company that develops software might buy equipment, pay for installation, or incur repair costs as part of its research and development. Or a pharmaceutical company developing new drugs might have equipment costs related to its research.
Those costs will need to be segregated, but any purchases after July 1 this year that fall into the new category could be eligible for the credit.
What’s more, additional savings accrue since purchases for “industrial machinery” are also exempt from sales and use taxes. If sales and use was already paid, the company could qualify for a refund.
The state offers several credits as a way to encourage investment and business in Tennessee, and a few other changes this year might also bring significant savings to your business.
For example, new credits have become available related to the cost of moving back-office functions to Tennessee. Previously, the “Headquarters Tax Credit” limited such credits to construction and relocation costs associated with moving a headquarters to Tennessee. But now, you may have your headquarters somewhere else, move your call center or accounting center to Tennessee, and still qualify.
With changes in law with the Revenue Modernization Act last year, it could be beneficial for businesses to check with their accountant about what new credits might help them.