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 score for February 2026 stands at 1.51 percent, earning a top-tier A+ rating. This figure represents a meaningful improvement over the start of the year, when January 2026 posted a 1.42 percent score and a standard A rating. When examining the trajectory leading into the current year, the index showed significant strength in late 2025, including a 1.71 percent peak in December. The current 1.51 percent mark indicates a healthy stabilization and suggests that the regional innovation ecosystem is regaining the momentum observed during the high-performing periods of the previous calendar year.

In a broader historical context, the recent score of 1.51 percent remains well above the significant lows encountered during this 60-month period. For instance, the index fell to a five-year low of 1.07 percent in December 2021 and experienced several periods of underperformance in the 1.10 to 1.30 percent range during 2022 and 2023. While the current index has not yet returned to the record peaks observed in mid-2025, where scores reached as high as 1.87 percent, it demonstrates a consistent ability to maintain an A-grade standard. This long-term trend reflects a maturing market that has successfully moved away from the volatility and lower ratings seen between 2021 and early 2024.

The positive outcomes of achieving a higher grade, particularly the A+ rating currently held, are vital for a thriving economic and creative landscape. High scores typically correlate with increased patent filings, efficient commercialization of new ideas, and a more robust pipeline of emerging technologies. These results foster a virtuous cycle where high performance attracts significant venture capital and top-tier research talent to the state. Furthermore, a consistently high score reinforces the reputation of the region as a leader in industrial and academic advancement, providing the necessary confidence for stakeholders to commit to long-term institutional investments.

Conversely, a decline into lower score brackets carries several negative implications for the future of regional innovation. Lower ratings, such as the B- and C+ grades seen earlier in the data set, often signal periods of stagnation where the development of new products fails to keep pace with broader market demands. Such dips can lead to reduced investor confidence and may prompt local innovators to seek more supportive environments elsewhere, resulting in a potential loss of intellectual capital. Maintaining the current high score is therefore essential to prevent the erosion of competitive advantages and to ensure that the infrastructure supporting new inventions remains adequately funded and utilized.

Discussion:

In February, 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.