Hankook Tire Raw Materials Ruled Taxable

The Industrial Development Board determined that specific raw materials at the Clarksville facility are not tax-exempt.

Updated on Oct. 1, 2026 in Manufacturing

Isometric editorial illustration of stacked rubber blocks and mounds of granular silica, representing industrial raw material inventory. — The Clarksville Industrial Development Board has ruled that raw rubber and carbon black materials at the Hankook Tire plant are subject to local property taxes. AI Illustration. Upload story photo >

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Should companies with tax incentive agreements be required to pay property taxes on their raw materials?

The Clarksville Industrial Development Board has formally ruled that Group 8 tangible personal property at the local Hankook Tire plant is fully taxable. This decision confirms that materials like rubber and carbon black silica fall outside the scope of the company's existing tax exemption agreement.

Why it matters

The ruling aligns local tax policy with guidance from the Tennessee Comptroller's Office, which mandates that raw materials and supplies are ineligible for tax breaks under payment-in-lieu-of-taxes agreements. This move prevents potential tax revenue loss for Montgomery County as the plant continues its expansion.

Taxing these materials generates $200,000 to $250,000 in annual revenue per phase, with totals projected to hit $800,000 once Phase 3 begins in 2027. Currently, Phase 2 generates $500,000 to $600,000 in annual tax revenue for the county.

The players

Hankook Tire

This global company is a major tire manufacturer that operates a large production facility in Clarksville.

Industrial Development Board

This board oversees economic development agreements and tax incentives for businesses operating within the local jurisdiction.

Tennessee Comptroller's Office

This state agency provides financial guidance and oversight for local governments and tax policy across Tennessee.

Montgomery County Property Assessor's Office

This local government office is responsible for evaluating property values and managing tax assessments for residents and businesses.

The details

The Industrial Development Board clarified that Group 8 tangible personal property—comprising natural rubber, synthetic rubber, and carbon black silica—was never intended to be covered by the 20-year payment-in-lieu-of-taxes agreement. The Montgomery County Property Assessor's Office subsequently moved to include these items in local tax assessments, a move that prompted a months-long dispute with the company.

Hankook broke ground on the Clarksville plant in 2014.
The manufacturing facility officially opened in 2017.
The company began paying taxes on real property in 2021.
Assessment discussions between the company and county began in February 2025.
Phase 3 is scheduled to begin in 2027.

Market Landscape

This decision reflects a broader trend of local boards tightening oversight on industrial tax incentives to match state-level fiscal mandates. By aligning the Hankook agreement with the Tennessee Comptroller's Office guidance, the board reinforces uniform tax treatment across different manufacturing entities in the region.

The collection of these taxes provides additional revenue for Montgomery County, which may support local infrastructure or public services. While the change does not immediately alter retail tire prices for consumers, it ensures that large-scale industrial operators contribute fully to local tax pools.

The takeaway

Clarifying the specific exclusions in tax agreements prevents long-term fiscal uncertainty for both municipalities and corporations. Businesses should ensure their internal accounting for raw materials aligns strictly with state guidelines to avoid future tax disputes.