State Tax Incentives for Georgia Businesses

For many Atlanta companies little time and attention is spent on tax planning unless the subject arises during year end planning discussions. Most business owners and managers focus on managing operations, sales, production, and human resource issues. Naturally this leaves little time to focus on tax planning, especially when it is an area where most have little practical experience. However, the reality is there are many tax incentives available to eligible businesses that can lead to significant savings. While many of these are taken at the federal level, the state of Georgia also offers several lucrative incentives for eligible companies. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

Jobs Tax Credit

Creating new jobs is a good way to reduce overall state tax liability. This incentive provides a credit ranging from $1,250 to $4,000 per year for 5 years for every new eligible position created. To qualify, the new job must be in a specific industry such as manufacturing, distribution, or data processing. A minimum number of new jobs must be created within a year. The amount depends on a company’s tier of special zone. To receive the credit for all 5 years, the created jobs must remain filled for the duration.

Key Credit Details

• Credit Value: The amount of the credit is dependent on where the jobs are created.  Counties with the highest levels of economic distress are classified as Tier 1 counties and earn the highest credits: $4,000 per new job, per year, for 5 years.  New jobs in counties with less economic distress earn lower credits: $1,250 per new job per year.
• Special zones: These smaller areas are defined as Military Zones, Less Developed Census Tracts and Georgia Opportunity Zones.  A new job created in this area may earn a credit of $3,500 per year for 5 years.

Georgia R&D Tax Credit

Much like the federal credit, Georgia companies can earn a state level credit for conducting eligible research and innovation activities. Despite common misconceptions, the credit is not just available for lab research, but includes innovation activities such as developing new products, processes, or conducting certain tests on new manufacturing equipment.

Determining the credit amount starts with identifying the base amount. This includes in-state sales multiplied by a 3-year average of R&D expenses, or in-state sales for the current year multiplied by .03. Using the lesser of the two amounts as the base amount then take 10% of instate R&D investment above the base amount as the tax credit.

Eligible expenses are not limited to the cost of materials used in the research process, but also includes the time of instate engineers, technicians, managers, and others working on the project. The credit is first applied to state tax liability, then payroll withholding, and any extra amount is refundable. So, it’s possible a business can generate cash flow from the credit.

Quality Jobs Tax Credit

This incentive is available to businesses that create jobs which pay at least 10% above the average wage for the county in which employment is offered. These positions are deemed to be high paying jobs and are often eligible for this credit. To qualify a company must create 50 high paying jobs over a 24-month period. Once eligible, there is a seven-year period in which each new eligible job can earn a credit between $2,500 – $5,000 per new position, over a five-year period.

The value of the credit depends on the average wages of eligible positions. For example, a position that pays between 150% and 175% more than an average county job would be eligible for a $4,000 annual credit. Finally, the tax credits earned are applied against the current year state tax liability. If state tax liability is zero, the company may apply available credits against payroll withholding tax.

Other Available Incentives

• PPE Manufacturing Credit – Available to businesses that manufacture Personal Protection Equipment (PPE). The credit rewards job creation that expands a company’s capacity to produce these products.
• Port Tax Credit Bonus – Available to companies that increase imports or exports through a Georgia port by 10% and to those that already qualify for the Job Tax or Investment Tax Credit.

Contact Us

There are several Georgia tax incentives available to Atlanta businesses. While some are laser focused on specific industries, there are others that can apply to a broader number of organizations. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.