Tennessee Form FAE-170 is the annual franchise and excise tax return filed by corporations, LLCs, limited partnerships, and business trusts doing business in Tennessee. To complete it, you calculate franchise tax at 0.25% of Tennessee net worth (with a $100 minimum) on Schedule F, calculate excise tax at 6.5% of Tennessee net earnings on the appropriate J-schedule, claim any credits on Schedule D, and file electronically through the Tennessee Taxpayer Access Point by the 15th day of the 4th month after your fiscal year ends. For calendar-year filers, that means April 15.1Tennessee Department of Revenue. F and E-5 – Due Date for Filing Form FAE170 and Online Filing Requirement
Confirm You Have to File
The return covers any entity that is incorporated, qualified, or registered to do business in Tennessee and has a legal existence separate from its owners. Corporations, LLCs, limited partnerships, and business trusts are all in scope, whether they are active or dormant on the Secretary of State’s rolls. An inactive entity that never formally dissolved still owes the $100 minimum franchise tax each year until it terminates its registration.2Justia. Tennessee Code 67-4-2119 – Minimum Franchise Tax
General partnerships and sole proprietorships are not on the hook unless they’ve elected corporate treatment federally. Insurance companies, credit unions, family-owned non-corporate entities, and certain farming or personal-residence LLCs and LPs are exempt, but most of them still have to file Form FAE-183 annually to claim the exemption.3Tennessee Department of Revenue. Entities Exempt from Franchise and Excise Tax
Out-of-State Businesses
You don’t need a Tennessee charter to owe these taxes. Tennessee treats an out-of-state entity as doing business in the state, and requires it to file, when it meets any of these thresholds:
- $50,000 or more in property or payroll in Tennessee
- $500,000 or more in receipts from Tennessee customers
- 25% or more of total property, payroll, or receipts attributable to Tennessee
A business that operates systematically and continuously in Tennessee with receipts from Tennessee customers can also have substantial nexus without hitting those numbers.4Tennessee Department of Revenue. Out-of-State Businesses and Nexus in TN
What to Gather Before You Start
Download the current FAE-170 kit from the Department of Revenue. It bundles the main return with Schedules A through V and instructions.5Tennessee Department of Revenue. Franchise and Excise Tax Forms Have your Federal Employer Identification Number, your Tennessee Secretary of State control number, and a completed copy of your federal income tax return ready. The federal return is the starting point for almost every number on the FAE-170.
Calculating Franchise Tax on Schedule F
For tax years ending on or after January 1, 2024, franchise tax is based solely on the entity’s net worth. The old property measure (Schedule G) was repealed, so you no longer compare net worth against book value of Tennessee property and pay on the higher figure.6Tennessee Department of Revenue. Important Notice – Franchise Tax Property Measure Repeal
Compute net worth on Schedule F1 for a standalone entity, or Schedule F2 if you’ve filed a Consolidated Net Worth Election. The basic formula is total assets minus total liabilities from your books and records.7Tennessee Department of Revenue. Franchise and Excise Tax If you operate in more than one state, apportion the result to Tennessee. Schedule A applies the 0.25% rate to the apportioned figure, and the $100 minimum sets the floor regardless of what the math produces.
Calculating Excise Tax on Schedule J
The excise tax base starts with net earnings from your federal return, entered on the J-schedule that matches your entity type:
- Schedule J1 for partnerships
- Schedule J2 for single-member LLCs filing as individuals
- Schedule J3 for S corporations
- Schedule J4 for C corporations and other entities
From that starting number, Schedule J walks you through additions and deductions to reach Tennessee taxable income. The adjustment that catches the most filers is bonus depreciation. Tennessee permanently decoupled from IRC Section 168, so any bonus depreciation claimed on the federal return must be added back, with Tennessee’s own depreciation amount deducted in its place. Other typical additions include intangible expenses paid to affiliated entities, excise tax deducted on the federal return, and tax-exempt interest. Schedule B applies the 6.5% rate to the final Tennessee net earnings figure.8Justia. Tennessee Code 67-4-2007 – Tax Imposed
Apportionment if You Operate in More Than One State
Multi-state businesses only owe Tennessee tax on the share of income and net worth attributable to Tennessee. For tax years ending on or after December 31, 2025, the standard apportionment formula uses a single sales factor: the ratio of Tennessee receipts to total receipts determines what portion of income is taxed here.9Tennessee Department of Revenue. Tennessee Works Tax Act Adopts Single Sales Factor Common carriers, air carriers, and air express carriers use their own apportionment schedules (O, P, and R).
Claiming Credits on Schedule D
Credits that reduce your franchise and excise liability get reported on Schedule D. The Job Tax Credit is one of the more common ones, requiring at least 25 net new full-time jobs (37.5 hours per week with health coverage offered) within a 36-month period plus at least $500,000 of investment in a qualified business enterprise. An Enhanced Job Tax Credit applies in economically distressed areas. The Industrial Machinery Credit (computed on Schedule T) and Brownfield Property Credits show up regularly as well. Eligibility rules for every available credit are in the Schedule D instructions inside the FAE-170 kit.
Estimated Payments During the Year
If your combined franchise and excise liability is $5,000 or more for the year, you must make quarterly estimated payments using Form FAE-172.10Tennessee Department of Revenue. Quarterly Franchise, Excise Tax Declaration The four installments are due on the 15th day of the 4th, 6th, and 9th months of the current tax year, and the 15th day of the 1st month of the next tax year. For a calendar-year filer, that’s April 15, June 15, September 15, and January 15.11Tennessee Department of Revenue. Franchise and Excise Tax Due Dates and Tax Rates
Underpayment carries its own penalty: 2% per month, up to 24%.12Justia. Tennessee Code 67-4-2015 – Filing of Returns – Payment of Tax – Penalty Report the payments you made on Schedule E of Form FAE-170 so they’re applied against the total liability on Schedule C.
The Filing Deadline and Getting an Extension
Form FAE-170 is due on the 15th day of the 4th month after the close of your fiscal year, which is April 15 for calendar-year businesses. When that date lands on a weekend or federal holiday, the deadline moves to the next business day.
You can request a seven-month extension by filing Form FAE-173 and making a sufficient payment by the original due date. The required extension payment is the lesser of 90% of the current year’s liability or 100% of the prior year’s. If you expect a refund, you can file the extension without paying.13Tennessee Department of Revenue. F and E-9 – Extension for Filing the Franchise and Excise Tax Return The extension buys time to file, not time to pay. Any balance owed after the original due date accrues interest and can trigger penalties.
Filing and Paying Through TNTAP
Nearly all franchise and excise taxpayers are required to file electronically through the Tennessee Taxpayer Access Point.14Tennessee Department of Revenue. E-filing Information Paper filing by mail is available only to businesses that have received a specific waiver from the Department of Revenue.
In TNTAP, log into your business account, enter your data on the applicable schedules, and authorize an electronic funds transfer for any balance due. The system returns a confirmation number after submission; save it as your filing receipt. You can track return status and payments from the account dashboard. Electronic payments typically post within two to three business days.
Penalties and Interest for Missing the Deadline
Late filing or late payment triggers a penalty of 5% of the unpaid tax for each 30-day period (or fraction of one) that the amount stays delinquent, capped at 25%. Even a return with nothing owed carries a $15 minimum penalty if it comes in late.15Justia. Tennessee Code 67-1-804 – Delinquency – Dishonor of Check
Interest runs separately from penalties, accruing from the original due date until you pay. The Commissioner of Revenue sets the rate annually and publishes it in the Tennessee Administrative Register each July 1.16Justia. Tennessee Code 67-1-801 – Rate of Penalty and Interest Estimated payment penalties stack on top, so skipping quarterly payments and trying to settle everything on the annual return can produce both sets of penalties on the same tax year.