June 2026: 1.53% (A+ grade)

Tennessee inventionINDEX June 2026: 1.53% (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).

Historical Tennessee inventionINDEX Scores

The Tennessee inventionINDEX score for the past 12 months is shown in the table below.

The Tennessee inventionINDEX score for June 2026 stands at 1.53 percent with an elite A+ rating, reflecting a highly robust environment for innovation and commercial development. When evaluated against the historical data spanning the last sixty months, this recent figure demonstrates impressive stability and sits comfortably above the comprehensive historical average of approximately 1.48 percent. This performance underscores a significant long-term maturation in the state’s innovation ecosystem, especially when contrasted with the earliest data points from late 2021, where scores frequently languished in the lower quartiles and bottomed out at a historical low of 1.07 percent in December 2021. By maintaining an A+ tier ranking into the summer of 2026, the index signals that Tennessee has successfully transitioned from an era of variable performance into a sustained period of high-level intellectual and industrial output.

A closer examination of the five-year trajectory reveals distinct periods of acceleration and consolidation within the regional economy. The absolute pinnacle of the index occurred in July 2025, reaching a record high of 1.87 percent, followed closely by strong showings in September 2025 at 1.84 percent and March 2026 at 1.78 percent. Over the most recent twelve-month stretch, the index achieved an impressive mean score of 1.60 percent, which represents a noticeable step up from the preceding twelve-month average of 1.51 percent. This steady accumulation of A+ ratings over the past two years stands in stark contrast to the cyclical volatility observed in 2022 and 2023, during which scores regularly dipped into the 1.10 percent and 1.20 percent ranges, yielding softer grades such as B- and C+. The historical comparison highlights that the current index is not merely experiencing a temporary spike but is operating at a structurally elevated baseline.

The positive outcomes of maintaining a higher inventionINDEX score and securing top-tier grades like A+ extend far beyond mere statistical achievements. An elevated index signifies an aggressive expansion in proprietary technology development, a surge in patent filings, and a highly efficient transfer of research from academic institutions to the commercial marketplace. This thriving innovative environment serves as a powerful magnet for venture capital firms, major technology corporations, and highly skilled professional talent seeking dynamic opportunities. Furthermore, high grades bolster consumer and corporate confidence, fostering an economic climate where businesses are eager to invest in long-term research and development. Ultimately, these elevated metrics translate into sustainable job creation, heightened productivity, and a reputation for the state as a leading national hub for cutting-edge industrial progress.

On the other hand, the negative implications of a lower score or a descent into lower grade tiers like B or C demand careful strategic consideration. When the index contracts, as seen during the historical dips in late 2021 and mid-2023, it denotes a systemic slowdown in commercial creativity and a potential bottleneck in the pipeline of new ideas. A depressed score often reflects diminished research funding, a reluctance among enterprises to take entrepreneurial risks, or an inability to successfully commercialize new technologies. The broader consequences of prolonged low performance include a loss of regional competitiveness, potential capital flight to more innovative states, and the stagnation of high-wage manufacturing and engineering sectors. Recognizing these unfavorable outcomes underscores why monitoring the historical trajectory is vital, as a declining index serves as an early warning system for policy makers and industry leaders to implement corrective economic stimuli.

Discussion:

In June, 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.