Tax Incentives
Corporate Tax Credits
Georgia offers a range of corporate tax credits that enable companies to minimize or completely eliminate state corporate income taxes which, at 6%, are already among the lowest in the nation. For some of the credits, the amounts are dependent on the "tier status" of the community.
Tier status refers to an annual four-tier ranking of the economic vitality of Georgia's counties. The highest credits are offered in the counties with the greatest need (Tier 1 and 2 counties), while the most prosperous counties (Tier 3 and 4 counties) offer lesser amounts.
Single Factor Apportionment - In 2005, Georgia became the first state in the Southeast to adopt a "Single Factor Gross Receipts" apportionment formula. As indicated by its name, the new "Single Factor Gross Receipts" formula will treat a company's Gross Receipts, or sales factor, as the only relevant factor in determining the portion of that company's income that is subject to Georgia income tax.
Previously, Georgia used a three-factor apportionment formula, but for the 2008 tax year and thereafter, Georgia property and payroll will not factor into the calculation of a company's corporate income tax. This new single sales factor apportionment formula significantly reduces the effective rate of Georgia income taxation of Georgia-based manufacturing, distribution and service companies with substantial sales to customers outside Georgia.
Accordingly, in 2009, only $1.3 million (.13 x $10 million) of In-State Manufacturing Co., Inc.'s income would be subject to Georgia's 6% corporate income tax under the new Single Factor Gross Receipts formula. If the sales in Georgia compared to total sales were less than 13%, then the amount subject to Georgia's income taxes would also be less. In addition, Georgia does not use the so-called "Throw Back Rule," under which many states tax income from sales of goods or services to out of state customers if the customer's state does not already tax that income.
Job Tax Credit - Strategic industries such as distribution, technology, manufacturing, telecom, processing companies and their headquarters qualify for Georgia's Job Tax Credit. Depending on the community's tier, companies must create between five and 25 net new jobs per year to qualify. For each year (up to five years) the jobs are maintained, qualified companies can claim a tax credit with a value of $750 – $3,500 per job, per year. An additional $500 credit is offered in counties that participate in a multi-county joint development authority. Unused job tax credits may be carried forward ten years. Increased job tax credits, equal to Tier 1 credits, are also allowed for companies that create jobs in less developed pockets of metro areas, regardless of the county's tier. Georgia has 40 counties that offer job tax credits to retail and business operations other than those listed above. See the 2009 Georgia Job Tax Credit Map below.
Quality Job Tax Credits - Companies that create at least 50 jobs and pay wages at least 110% of the county average are eligible to receive a credit of $2500-$5000 per job, per year, for up to five years, based on the scaled system below. Credits may be used to offset the company's payroll withholding once all other tax liability has been exhausted and may be carried forward ten years.
Headquarters Tax Credit - Companies that create or relocate a North American or international corporate headquarters, hire at least 50 qualified headquarters employees and invest $1 million can qualify for a tax credit of $2,500 or $5,000 per job (depending on the wages paid), per yar for 5 years. The credit can offset up to 100% of the company's Georgia corporate income tax liability. Excess credits may be taken as a credit against payroll withholding taxes.
Retraining Tax Credits - A company's direct investment in training can be claimed as a tax credit – 50 percent of the employer's direct cost up to $500 per, per approved training program. The total amount of credit cannot exceed $1250 per employee per year. Training programs must be approved by the Technical College System of Georgia. This tax credit can be used to offset up to 50 percent of a company's state corporate income tax liability. The credit is available to all Georgia businesses that file a …Georgia income tax return. The retraining program must be for quality and productivity enhancements and certain software technologies. Unused credits can be carried forward 10 years. These credits can be combined with other tax credits.
Child Care Tax Credits - Child Care credits range from 75 percent to 100 percent of costs. The credits are available to all businesses in the state. The child care facility must be licensed by the state. All child care credits can be used against 50 percent of taxpayer's income tax liability in a given year.
Employers who purchase or build qualified child care facilities are eligible to receive Georgia income tax credits equal to 100 percent of the cost of construction. The credit for the cost of construction is spread over 10 years [10 percent each year]. Unused child care credits from the purchase or construction of a child care facility can be carried forward three years.
Employers who provide or sponsor child care for employees are eligible for a credit against Georgia income tax equal to 75 percent of employers' direct costs. Credits that are related to the operating cost of the facility may be carried forward five years.
Optional Investment Tax Credit - The optional investment tax credit can be taken in lieu of the investment tax credit. The credits range from 10 percent to 6 percent of qualified capital investment. This credit is available to taxpayers that qualify for investment tax credits. The requirements are the same except for the minimum investment ranging from $5 to $20 million. A taxpayer can use the tax credits up to the calculated amount for a given year. The credit may be claimed up to 10 years following the year the property was first placed in service provided the property remains in service. The optional investment tax credit equals 90 percent of the difference between (1) the taxpayer's Georgia income tax liability for the current year and (2) the taxpayer's base tax liability.
Opportunity Zone Job Tax Credits - Local governments which undertake redevelopment and revitalization efforts in certain older commercial and industrial areas can now qualify those areas for the State's maximum state job tax credit of $3,500 per job. The credits are available for areas designated by the Georgia Department of Community Affairs (GA DCA) as "Opportunity Zones". The incentive – which is available for new or existing businesses which create two or more jobs – are credits which can be taken against 100% of the business' income tax liability and state payroll withholding. Job Tax Credits (JTCs) awarded in an Opportunity Zone are applicable to all businesses/industries.
