TENNESSEE INVENTIONINDEX | JANUARY 2026

January 2026: 1.42% (A grade)

Tennessee inventionINDEX January 2026: 1.42% (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

The Tennessee inventionINDEX began 2026 with a score of 1.42%, securing a solid ‘A’ rating. While this performance reflects a stable and healthy innovation environment, it represents a notable shift from the higher momentum observed in the latter half of 2025. Over the last five years, the index has demonstrated significant variability, yet the current score indicates that the state continues to maintain a position of strength despite a moderate decrease from the 1.71% recorded in December 2025. This latest figure serves as a benchmark for the year ahead, suggesting a period of stabilization within the state’s creative and technical sectors.

When compared to the sixty-month historical data, the January 2026 score of 1.42% sits slightly below the five-year average of 1.47%. Throughout this five-year window, Tennessee has reached impressive heights, most notably hitting a peak of 1.87% in July 2025. Conversely, the state has also weathered lower periods, such as the 1.07% score in December 2021 which resulted in a ‘C+’ rating. Although the current score is lower than the twenty-eight ‘A+’ ratings achieved over the last sixty months, it remains well above the historical lows, placing Tennessee in a competitive tier that balances consistency with room for renewed growth.

The positive outcomes associated with maintaining a high grade, particularly in the ‘A’ and ‘A+’ range, are substantial for the state’s economic and reputation-based standing. Such ratings typically signal a flourishing ecosystem for intellectual property and a high rate of successful technological integration. For Tennessee, consistently high scores attract significant venture capital, encourage the retention of high-skilled talent, and foster an environment where research and development can thrive. This level of performance provides the necessary confidence for stakeholders to invest in long-term projects, ensuring that the state remains a primary destination for industrial and scientific advancement.

On the other hand, if the inventionINDEX score were to experience a prolonged decline into the ‘B’ or ‘C’ categories, the implications could be detrimental to the state’s competitive edge. A lower score often indicates a slowdown in the production of new ideas or a failure to translate innovation into tangible economic value. Such a trend could lead to reduced investor interest and a potential migration of talent toward more dynamic innovation hubs. Avoiding the stagnation seen in late 2021 is crucial, as a lower rating would likely necessitate a significant re-evaluation of policy and investment strategies to prevent the erosion of the state’s position in the global market.

Discussion:

In January, the Tennessee inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is similar to the prior 12 months, which experienced an upward 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.