May 2026: 1.57% (A+ grade)

Tennessee inventionINDEX May 2026: 1.57% (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 recorded a score of 1.57 percent with an A+ rating in May 2026, demonstrating sustained strength as the mid-year approaches. This latest figure represents a solid increase from the 1.53 percent registered in April 2026, although it marks a slight step back from the impressive 1.78 percent achieved in March 2026. When evaluated against the comprehensive 60-month historical baseline, May’s score sits comfortably above the five-year average of approximately 1.48 percent. This positioning indicates that Tennessee’s innovation framework is maintaining a highly competitive stance, successfully keeping its recent monthly performance well within premium-tier territory.

A broader review of the historical data reveals a pattern of robust development and steady maturation within the state’s innovation ecosystem over the past five years. The index reached its absolute historical peak in July 2025, climbing to 1.87 percent with an A+ rating, which capped off a highly productive year that averaged 1.59 percent overall. Conversely, the historical floor occurred in December 2021, when the index dipped to its lowest point of 1.07 percent with a C+ rating. The steady upward climb in annual averages, rising from 1.40 percent in 2023 to 1.48 percent in 2024, and maintaining a strong 1.56 percent average in early 2026, highlights a resilient structural baseline that has successfully minimized low-tier ratings.

Achieving elevated index scores and maintaining a top-tier grade like A+ yields significant positive outcomes for Tennessee’s regional economy. High ratings reflect a flourishing ecosystem characterized by increased patent activity, strong commercialization of new technologies, and a high volume of corporate research and development funding. This peak operational environment strongly reinforces investor confidence, making the state an attractive destination for national venture capital and major technology relocations. Furthermore, a thriving innovation index creates high-paying employment opportunities and fosters deep collaboration between academic institutions and private industries, ensuring that elite engineering and scientific talent remains in the state.

In contrast, a downward shift toward lower scores and depressed ratings introduces serious negative implications for the state’s long-term growth. When the index contracts toward the historical C+ or B- ranges, it typically points to underlying friction within the entrepreneurial pipeline, such as capital constraints, regulatory bottlenecks, or a temporary reduction in research outputs. A prolonged depression in the score can cause a chilling effect among investors, leading to tighter funding rounds for early-stage startups and localized tech ventures. Over time, a stagnant or declining index risks a talent drain to more aggressive regional tech hubs, which can ultimately delay industrial modernization and compromise Tennessee’s competitive edge.

Discussion:

In May, the Tennessee inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is in contrast 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.