Many Atlanta businesses pay close attention to tax planning at year-end. There are often easy steps that can be taken to immediately reduce federal and state income taxes. While effective, it’s important to review opportunities throughout the year to identify tax deduction and incentives which can be leveraged based on current or future plans. Atlanta businesses may be surprised to learn there are a number of tax incentives available from the state of Georgia for certain business activities. This can include employee hiring, training or retraining, offer certain employee benefits and even certain equipment purchases. While some incentives are only available to companies making one-time decisions there are other available for more routine activities. To help clients, prospects and others understand the state tax incentives available, Wilson Lewis has provided a summary of the key information below.
Key Georgia Tax Incentives
- Employee Retraining Credit – This credit is available to employers that offer retraining on how to new equipment, technology or operating systems. It’s important to note this does not include retraining on any mass-produced software products for word processing, database management, presentations or email. The credit is calculated at 50% of the direct costs related to retraining with a limit of $500 per employee per approved program each year. The credit may be used to offset up to 50% of state income tax and must be claimed within a year.
- Work Opportunity Tax Credit – Similar to the federal version, this credit is available to employers that hire workers from targeted groups. The credit amount varies from $1,200 to $9,600 per qualified employee. There are various forms and qualification steps that need to be taken, so it’s important to consult with a qualified tax professional to guide you through the process.
- Health Insurance Expense Credit – Employers are allowed a tax credit for qualified health insurance expenses in the amount of $250.00 for each employee that has been enrolled in a qualified health insurance plan (high deductible healthcare plan) for twelve consecutive months. The insurance must be made available to all employees and the credit is only available when the health insurance premium expense is at least $250 annually.
- Electric Vehicle Charger Credit – This credit is available for a business that purchases an electric vehicle charger for a Georgia location. The credit is the lesser of 10% of the cost of the charger or $2,500. This is a one-time credit and must be taken in the year the charger was purchased.
- Headquarters Tax Credit – A business that established their headquarters in Georgia prior to 2009 can qualify for this credit assuming the following are met. A minimum of 50 headquarter jobs must be created and within one year of the first hire the company must spend $1M on construction, renovation or related costs. The credit is available for establishing new full-time jobs in the state. To qualify each job must pay a salary that is a stated percentage for the county in which the company is located. The percentages vary based on county location and population. The credit is equal to $2,500 annually per new qualifying full-time job. The credit can be used to offset Georgia income tax liability and any excess can be used as a credit against withholding taxes.
- Qualified Transportation Credit – This credit allows Atlanta companies to claim a credit of $25 per employee for any qualified transportation fringe benefit. This can include costs related to acquiring a transit pass, parking fees or any qualified bicycle commuter reimbursement.
- Employer Credit for Sponsoring Child Care – Any Georgia company that provides or sponsors childcare services for employees may receive a tax credit up to 75% of the employee’s direct costs. The credit is limited as it can not exceed 50% of the taxpayer’s total state income tax liability. The good news is that claimed credits that are not used can be carried forward for a period of up to 5 years.
- Credit for Purchasing Child Care Property – The state also offers a credit for employers that purchase qualified childcare property equal to 100% of costs. The credit is claimed at the rate of 10 percent for a period of ten years. Any unused credits can be carried forward for a period of three years and the credit is limited to 50% of the company’s tax liability.
- Film & Entertainment Tax Credit – A state tax credit is available to production companies with eligible projects including films (feature and television), pilots or series, televised commercials and music videos distributed outside of Georgia. The 20% transferable tax credit is only available to companies that have received project certification. Qualified expenditures include materials, services, and labor. It’s important to note, there is a salary cap of $500,000 per person, per production, when an employee is paid by salary. When approved, the credit can be used against Georgia income tax liability (production-related) or can be sold or transferred to one or more Georgia taxpayers.
- Quality Jobs Tax Credit – The state offers a tax credit for companies that create jobs that pay at least 10% above the average rate for the county in which they are located. In order to qualify a company must create 50 of these jobs in a 24-month period and the value of the credit is based on average wages of the new jobs. For example, if a company pays an average wage of 110% to 120%, they can claim a $2,500 credit for five years. This credit can also be applied to payroll taxes if the income tax liability is reduced to zero.
- Investment Tax Credit – This tax credit is designed to help Georgia companies expand and improve facilities. In order to qualify, a company must be in the telecommunications and manufacturing industries and have operated in the state for at least three years. Credits can be earned for qualifying activities and amount to 1% to 8% of capital investments of $50,000 or greater. The credit can be used to offset up to 50% of income tax liability and can be carried forward for a period of up to 10 years.
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Georgia offers a variety of tax incentives that can supplement a company’s tax planning efforts. In fact, many businesses may qualify for a credit which they were not aware of is available to them. If you have questions about the opportunities outlined above or need assistance with a tax planning or compliance issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.