Tennessee has a favorable corporate tax environment with a 6.5% corporate income tax rate, and no individual income tax.
Understanding the cost of apportionment in the state can help you accurately report earnings to the IRS and local government.
Corporations
- Filing Requirements. Generally, if you conduct business within any county and/or incorporated municipality in Tennessee, then you should register for and remit business tax. The business tax consists of two separate taxes: the state business tax and the city business tax.
With a few exceptions, all businesses that sell goods or services must pay the state business tax. This includes businesses with a physical location in the state as well as out-of-state businesses performing certain activities in the state. If you are an out-of-state business, you must pay the state business tax if you have a substantial nexus in the state.
- Allocation and Apportionment. Tennessee follows the market-based rule in sourcing receipts from performance of services to the state.
Partnerships
Filing Requirements. Partnerships are not among the business entities upon which Tennessee franchise, excise taxes are imposed.
Employees & individual filers
Tennessee does not tax an individual’s earned income, so you are not required to file a Tennessee tax return. However, if you earn income from other states or have other tax obligations (e.g., business income or self-employment taxes), you may still need to file tax returns in those jurisdictions. It’s also important to note that while Tennessee does not tax earned income, you may still be subject to federal income tax and should ensure you comply with federal filing requirements.
Ensuring Accurate Tax Filings
Consulting an expert CPA can help you keep a handle on different laws and tax implications.
Fusion CPA has a team of certified public accountants who are highly skilled in handling multi state taxes. We’re positioned to help you take the stress out of tax season, so you can focus on what really matters.
To see how we can help you with a proactive tax strategy to save you time and money, schedule a Discovery Call with one of our CPAs.
____________________________________________________
This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written. Older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.
