TENNESSEE INVENTIONINDEX | DECEMBER 2025
December 2025: 1.71% (A+ grade)
Tennessee inventionINDEX December 2025: 1.71% (A+ grade)
The inventionINDEX measures innovation output by comparing GDP growth with patent production growth.
Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).
Tennessee inventionINDEX Scores – Last 12 months
| Month | inventionINDEX Score |
| December 2025 | 1.71% |
| Nov 25 | 1.51% |
| Oct 25 | 1.54% |
| Sep 25 | 1.84% |
| Aug 25 | 1.40% |
| Jul 25 | 1.87% |
| Jun 25 | 1.44% |
| May 25 | 1.37% |
| Apr 25 | 1.51% |
| Mar 25 | 1.56% |
| Feb 25 | 1.75% |
| Jan 25 | 1.56% |
| Dec 24 | 1.55% |
The Tennessee inventionINDEX reached a notable 1.71% in December 2025, securing an A+ rating that underscores a period of exceptional performance relative to the last five years. When examined against the 60-month historical average of 1.48%, the current score indicates a significant strengthening of the state’s innovation landscape. This peak follows a year of sustained growth, with the average score for the most recent twelve-month period rising to 1.59% compared to the 1.48% average recorded in the preceding year. Such progress demonstrates a resilient upward trajectory, positioning the current figures among the highest in the recorded history and placing them well above the volatility observed in earlier periods.
Achieving a higher grade, particularly the A+ rating consistently seen throughout 2025, brings a wealth of positive outcomes for the regional economy. A robust index score often correlates with increased research and development activity, higher patent filing rates, and a more vibrant ecosystem for emerging startups. This performance signals to investors and corporations that Tennessee possesses a fertile environment for technological advancement and creative problem-solving. Consequently, these high marks help attract top-tier talent and venture capital, which in turn fuels high-wage job creation and cements the state’s reputation as a leader in the national innovation economy.
Conversely, the historical data reveals the potential risks associated with lower index scores, such as the 1.07% recorded in December 2021 which resulted in a C+ rating. These dips reflect periods of reduced momentum where the pace of new inventions or technical breakthroughs may have slowed. Negative implications of a lower score include a potential loss of competitive advantage to neighboring regions and a decrease in the efficiency of intellectual property commercialization. Persistent lower grades can signal a stagnation in the local knowledge economy, making it more difficult to secure the funding necessary for large-scale industrial or academic research projects.
Looking forward, the consistent trend of high-performing months suggests that the strategic investments in Tennessee’s intellectual infrastructure are yielding measurable results. Maintaining an index score above the historical baseline is essential for ensuring long-term economic stability and technological relevance. By analyzing these fluctuations, stakeholders can better understand the factors that drive peak performance and address the systemic issues that cause periodic declines. The current trajectory provides a solid foundation for continued growth, emphasizing the importance of fostering an environment where innovation can flourish without interruption.
Discussion:
In December, the Tennessee inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend.
As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.
Learn More:
Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.
Swanson Reed’s Tennessee office provides R&D tax credit consulting and advisory services to Nashville, Memphis, Knoxville, Chattanooga, Clarksville, Murfreesboro, Franklin, Jackson, Johnson City, and Bartlett.
Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.
Who We Are:
Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years.
Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs. For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.
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What is the R&D Tax Credit?
The Research & Experimentation Tax Credit (or R&D Tax Credit), is a general business tax credit under Internal Revenue Code section 41 for companies that incur research and development (R&D) costs in the United States. The credits are a tax incentive for performing qualified research in the United States, resulting in a credit to a tax return. For the first three years of R&D claims, 6% of the total qualified research expenses (QRE) form the gross credit. In the 4th year of claims and beyond, a base amount is calculated, and an adjusted expense line is multiplied times 14%. Click here to learn more.
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