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Franchise & Excise Tax Exemptions

Seventeen different types of entities are exempt from the franchise and excise taxes.   

  1. Industrial Development Corporations
  2. Masonic lodges and similar lodges
  3. Regulated Investment Companies owning 75% in United States, Tennessee, or local bonds
  4. Federal and state credit unions
  5. Venture Capital Funds
  6. Farming / personal residence in LLCs or LPs
  7. LLCs or LPs that acquire receivables from an affiliate that reported the income in TN
  8. LLCs or LPs that provide affordable housing and receives Low-Income Housing Credits 
  9. LLCs or LPs where the members are fully-obligated for the debts of the entity (OME)
  10. Partnership, trust, REMIC, or FASIT that has asset-backed security of debt obligations
  11. Family Owned Non-Corporate Entity (FONCE) (see the Exemption – FONCE page for additional information)
  12. LLC, LP, or business trust organized as a Diversified Investing Fund
  13. Tennessee historic property preservation entities
  14. Insurance companies
  15. TN Investco entity that receives investment credits under Tennessee Small Business Act
  16. Any entity owned in whole or part by the Armed Forces and has 50% of income from property primarily for benefit of members of Armed Forces
  17. Qualified Low-Income Community Historic Structure

Entities 5-12 and 16-17 listed above must file an Application for Exemption form in order to receive the exemption.  They must also file an Annual Exemption Renewal form by the 15th day of the fourth month following the close of the entity’s taxable year to certify that they continue to be eligible for the exemption.  Entities 6 and 11 must also file an annual Disclosure of Activity form with the initial application for exemption or annual exemption renewal form.

For more information, see Important Notice Annual Renewal of Franchise and Excise Tax Exemption.