Maximizing Your Benefits: An Overview of Georgia Tax Credits and Incentives
The state of Georgia is fertile for businesses that want to leverage tax credits and incentives. Whether you're expanding, relocating, or just getting started, here are some things you need to know to offset the costs of business growth to thrive in the Peach State.
Doing business in Georgia? Don't overlook these tax credit opportunities. Look into the variety of Georgia tax credits and incentives for employers that make investing and expanding your business in Georgia worth exploring. Regardless of your business size or stage, here are some of the tax credits and incentives you should be aware of.
Georgia Jobs Tax Credit ("GAJTC") Tiers and Special Zones: Investments in Job Growth Pays Off
The GAJTC helps fuel the expansion of businesses by rewarding job creation within the state. It empowers your business to collect $750 - $5,250 per new full-time job created each year, for up to five years, depending on location and certain other eligibility requirements.
Georgia counties and census tracts are ranked as "economic tiers" based on three factors:
(1) unemployment rate;
(2) per capita income and
(3) percentage of residents whose incomes are below the poverty level.
For growing businesses located in Tier 1 counties, military zones, opportunity zones or less developed census tracts, employers can use the credit to offset income tax or to reduce a payroll withholding obligation.
Companies may be eligible for the GAJTC if they create new full-time jobs in Georgia that are at least 35 hours a week, offer health insurance and pay more than the lowest county average wage. The GAJTC can offset 50 to 100% of state income tax liability with a 10-year carry-forward period.
All industries are eligible in the 40 least-developed counties and other specifically designated zones. Beyond these zones, employers generating the jobs must operate in one of the eight qualified industries:
- Manufacturing
- Tourism
- Processing
- Telecommunications
- Broadcasting
- Warehousing and distribution
- Elderly and disability services
- Research and development
The county in which the job is created determines the amount of the credit, which ranges from $750 - $4,000. Companies located in Tier 1 counties and specially designated areas can apply the base job tax credit against employee withholding taxes after corporate income tax has been eliminated.
Georgia's Quality Jobs Tax Credit ("GQJTC"): The More You Pay, the Greater the Credit
The GQJTC was created to encourage growth and provide an eligible company with a significant tax break. Companies in all industries in Georgia can qualify for the GQJTC. If the jobs your company creates pay at least 10% above the average wage of the county in which they're located and they're considered "high-paying jobs," you may qualify for an even higher GQJTC tax credit.
Once a company has a qualifying increase in the number of quality jobs within Georgia, there are additional benefits:
- A 5-year credit is provided for each qualifying job added, so long as jobs are maintained.
- This credit can also be used to offset up to 100% of a company's total Georgia income tax liability.
- It can be used against employee withholding after the income tax benefit has been exhausted.
- A one-year look back is available.
- Unused credits can be carried forward for up to 10 years.
Unfortunately, the credit cannot be combined with the Georgia investment tax credit for the same project or used for the same jobs claimed under the GAJTC, but it may be used along with the Georgia retraining tax credit.
The credit equals $2,500 to $5,000 per job every year, for five years, for the increase in average jobs over the previous year's average. What are the criteria?
- Must create at least 50 net new qualified quality jobs over a period of two years, exceeding the previous 12-month period's average.
- Acquiring employees through a merger does not count toward the credit.
- For rural counties only, ten (10) new Tier 1 county quality jobs and 25 Tier 2 county new quality jobs must be created.
- Must pay at least 110% of the average wage in the county where the jobs were created.
For businesses that have claimed the QJTC previously, to start a new period of eligibility, they must create at least 50 net new qualified quality jobs over a 24-month period, and they must also make a least a $2.5 million investment in qualified investment property.
More Georgia tax credit opportunities to consider
Georgia retraining tax credit ("GARTC")
The GARTC enables Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment, new technology or creating a stronger competitive position, companies can afford to Invest in more quality training.
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 and must be approved by the technical college system of Georgia.
Eligible expenses include:
- Costs of instructors and teaching materials
- Employee wages during training
- Reasonable travel expenses
Here are some things to keep in mind:
- You can receive a tax credit of 50 percent of direct training expenses.
- You can receive up to $500 credit per full-time employee per training program.
- The annual maximum of the credit amounts to $1,250 per employee.
- Unused credit can be carried forward for ten years.
Investment tax credit
For employers making an investment in certain types of manufacturing processes or equipment or providing telecommunications services, this tax credit kicks in. Depending on the county, the credit ranges from 1% - 5% of qualified investment expenses. To qualify, a company must:
- Have operated a manufacturing or telecommunications facility in Georgia for at least three years and;
- Make a minimum $100,000 investment.
- Qualifying businesses in rural counties that met certain criteria can qualify to utilize the credit against payroll withholding.
Eligible expenses include land acquisitions, improvements, buildings, machinery and equipment. Even more valuable, companies in certain designated counties may also be able to apply the excess credits to payroll withholding.
The Georgia research & development (R&D) tax credit
To qualify for the credit, the Georgia facility must be engaged in or have headquarters in one of these industries: manufacturing, warehousing and distribution, tourism, telecommunications, broadcasting, or companies engaged in qualified R&D activities.
The credit equals 10% of qualified R&D expenditures over a base amount. The value of the credit is determined based on qualifying expenditures each year along with a gross receipts test. Qualifying expenditures can include (but are not limited to):
- The purchase of materials and supplies.
- Fees for Georgia-based contract work.
- The portion of wages and salaries of the personnel, direct management and direct support dedicated to the R&D activities that occur in the state.
Port tax credit bonus
If your company increases imports or exports through a Georgia port by 10% and if you qualify for Georgia's job tax credit or investment tax credit (noted above), you're also eligible for the port tax credit bonus.
To qualify, your base port traffic amount must equal at least 10 TEUs (twenty-foot equivalent units). The 10% increase can be measured against the previous year or base year.
When paired with Georgia's job tax credit, the port credit value amounts to an additional $1,250 credit per new job per year for five years, as long as both the job and the higher level of port traffic are maintained.
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