The State of Georgia offers some of the most competitive tax credits and exemptions in the nation. Offers such as the Opportunity Zone are game changers that draw more and more major companies to Georgia each year. Tax credits give Georgia businesses the opportunity to minimize or even eliminate state corporate income tax. They apply to all qualifying companies – large, small and in between – rooted in Georgia or new to the state.
Typically, corporate income tax credits apply to 50 percent of a company’s state tax liability in a given year. But in some cases, they can offset up to 100 percent of corporate income tax as well as payroll withholding liability.
The following are the primary tax credits Georgia extends to new and existing companies. For more information and detail on these tax incentives, visit – Business Incentives Brochure Link.
Job Tax Credit
A job credit is a tax credit that helps fuel company expansion by rewarding job creation. In Georgia, job credits provide as much as $4,000 in annual tax savings per job for up to five years.
The exact value of the job credits depends on two factors – how many jobs are created, and where. A downloadable map shows how all Georgia counties and census tracts rank as “economic tiers” based on three factors: unemployment rate, per capita income and percentage of residents whose incomes are below poverty level.
Quality Jobs Tax Credit
The Quality Jobs Tax Credit is another job tax credit for jobs that pay higher-than-average wages. It can give Georgia companies a significant tax break and help drive growth.
The Quality Jobs Tax Credit rewards companies that create at least 50 jobs in a 12-month period – provided the jobs pay wages that are at least 10 percent higher than the county average for wages.
Port Tax Credit Bonus
The port tax credit bonus rewards new or expanding Georgia companies that increase imports or exports through a Georgia port by at least 10 percent over the previous or base year.
The port tax credit bonus may offset up to 50 percent of the company’s corporate income tax liability. Unused credits may be carried forward for 10 years – but the increase in port traffic must remain above the qualifying threshold, and the company must continue to meet the requirements for either the Job Tax Credit or the Investment Tax Credit.
Note: The port tax credit bonus cannot be used with Georgia’s quality jobs tax credit program.
Work Opportunity Tax Credits
Work Opportunity Tax Credits (WOTC) are federal tax credits awarded to Georgia companies that hire individuals who have consistently faced significant barriers to employment. The Georgia Department of Labor (GDOL) coordinates the WOTC program, which provides employers financial incentives when hiring workers from targeted groups of job seekers by reducing an employer’s federal income tax liability. The tax credit can be from $1,200 to $9,600 per qualified employee, depending on the target group. The most frequently certified WOTC is $2,400 for each adult new hire.
Mega Project Tax Credits
Mega project tax credits benefit Georgia companies that employ a minimum of 1,800 “net new” employees; and have either a minimum annual payroll of $150 million OR make a minimum $450 million investment in Georgia.
Companies meeting both requirements may claim a tax credit of $5,250 per job per year for the first five years of each net new job position.
The credits are first applied to the company’s state income tax. Excess credits are eligible to be used against payroll withholding. In all cases, mega project tax credits may be carried forward for 10 years.
Investment Tax Credit
Investment tax credits help Georgia businesses grow by making it more affordable to expand and improve facilities.
Companies in manufacturing or telecommunications support that have operated in Georgia for at least three years are eligible to earn investment tax credits for upgrades or expansions. Credit earned amounts to 1 percent to 8 percent of qualified capital investments of $50,000 or more.
Investment tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.
Companies should compare the benefits of the investment tax credit with those of the job tax credit, as taxpayers are allowed to claim one or the other, but not both.
Optional Investment Tax Credits
Optional investment tax credits can provide a long-term, significant tax benefit that rewards growing companies for making major investments in Georgia.
The exact value of the optional investment tax credits depends on three factors: how much is invested; where the investment is made in Georgia; and the change in a company’s tax liability.
The more a company grows, the greater the tax credits it can claim. However, the opposite is also true: without large increases in income tax liability, the usable tax credit could be small, or possibly zero.
Companies therefore should weigh the risks and potential payoffs of the optional investment tax credit versus the standard investment tax credit.
Research And Development Tax Credit
Research and development (R&D) tax credits are a valuable benefit for companies developing new products and services in Georgia.
R&D tax credits are available to any company that increases its qualified research spending. Brand new companies, existing companies embarking on R&D for the first time, established companies expanding their R&D budget – all are eligible for R&D tax credits.
The tax credit earned is a portion of the increase in R&D spending. The credit can be used to offset up to 50 percent of net Georgia income tax liability, after all other credits have been applied.
Any unused R&D tax credits can be carried forward for up to 10 years. In addition, excess R&D tax credits can be used against state payroll withholding.
Retraining Tax Credit
Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program.
Retraining tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.
Any business that files a Georgia income tax return is eligible for the retraining tax credit. To qualify, training programs must be designed to enhance quality and productivity or teach certain software technologies. To qualify for the credit, retraining expenses must be approved by the Technical College System of Georgia.
Film Television & Digital Entertainment Tax Credit
Film, television and digital entertainment tax credits of up to 30 percent create significant cost savings for companies producing feature films, television series, music videos and commercials, as well as interactive games and animation.
Georgia’s Entertainment Industry Investment Act provides a 20 percent tax credit for companies that spend $500,000 or more on production and post-production in Georgia, either in a single production or on multiple projects.
The state grants an additional 10 percent tax credit if the finished project includes a promotional logo provided by the state. If a company has little or no Georgia tax liability, it can transfer or sell its tax credits.
Small Business Incentives
Small business incentives, from tax relief to loan guarantees, make it easier to launch a new enterprise in Georgia and grow a small company.
These business incentives have helped Georgia earn top rankings in the number of new businesses started. According to the Kauffman Index of Entrepreneurial Activity, Georgia is second in the nation as having the largest increase in entrepreneurial activity during the past decade.
To learn about the Entrepreneurial and Small Business Development Loan Program, visit the OneGeorgia Authority website.