Tennessee inventionINDEX August 2026: 1.72% (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 reached 1.72% in August 2026, earning an A+ rating and representing a strong rebound from July 2026’s score of 1.41% with an A- rating. This latest performance sits well above the 60-month historical mean of 1.49%, demonstrating strong short-term momentum across the state’s innovation ecosystem. Over the 61 evaluated months from August 2021 through August 2026, the index has ranged from a low of 1.07% in December 2021 to a peak of 1.87% in July 2025. The August 2026 figure places in the upper quintile of all historical recordings, reflecting a robust period of inventive activity relative to multi-year benchmarks.

An analysis of yearly averages highlights a clear upward progression in Tennessee’s inventive capacity over time. Annual average scores grew from 1.42% in late 2021 and 1.46% in 2022 to 1.59% in 2025, maintaining a high baseline average of 1.56% through the first eight months of 2026. Out of 61 total monthly readings, the state achieved an A+ rating 31 times, accounting for over 50% of the recorded dataset. Lower tier marks such as B or C grades have become increasingly rare in recent years, with the last B-grade reading occurring in November 2024 at 1.25%, confirming structural stability and sustained performance.

Securing higher index scores and top-tier ratings like A+ delivers substantive economic and operational advantages. Elevated scores signify efficient technology transfer, robust patent filing velocity, and strong commercialization potential for regional discoveries. These top-tier marks boost investor confidence, attract venture capital allocation, and encourage research institutions to scale ongoing development programs. A high inventionINDEX score also serves as a talent magnet, drawing specialized engineering and scientific expertise into Tennessee while reinforcing the region’s reputation as a dynamic center for advanced technology.

Conversely, lower index scores and depressed grades bring notable strategic headwinds. Drops into the lower bands, such as the historic 1.07% C+ rating in December 2021 or the 1.18% B- rating in April 2023, point to potential friction within the innovation pipeline, such as regulatory delays, reduced research funding, or macroeconomic tightness. Slower output can cause investors to adopt a cautious posture, potentially delaying capital deployment and extending product development lifecycles. Continual tracking of the index allows stakeholders to identify these structural lulls early and implement targeted interventions to maintain competitive vigor.

Discussion:

In August, 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 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.

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