Georgia Economic Development Directory

Georgia State Incentives

SINGLE FACTOR APPORTIONMENT: 2005, Georgia became the first state in the Southeast to adopt a “Single Factor Gross Receipts” apportionment formula. This formula treats a company’s gross receipts, or sales in Georgia, as the only relevant factor in determining the portion of that company’s income subject to Georgia’s 6 percent corporate income tax. This significantly reduces the effective rate of Georgia income taxation of companies with substantial sales to customers outside the state. In addition, GA does not use the so-called “Throw Back Rule,” which many states use to tax income from sales of goods or services to out-of-state  customers if the customer’s state does not already tax that income.

CORPORATE TAX CREDITS

• QUALITY JOBS TAX CREDIT: Companies that create at least 50 jobs in a 12 month period where each job pays wages at least 110 percent of the county average are eligible to receive a tax credit of $2,500-$5,000 per job, per year, for up to five years, based on a scaled system. New quality jobs created within seven years can qualify for the credit. Credits may be used to offset the company’s payroll withholding once all other tax liability has been exhausted, and may be carried forward for 10 years.

• JOB TAX CREDIT: Companies and their headquarters that are engaged in strategic industries such as manufacturing, warehousing & distribution, processing, telecommunications, broadcasting, tourism and R&D may qualify. Depending on the community’s tier, companies must create between five and 25 net new full-time jobs in the first year. Credits may also be accrued for additional jobs created in years 2-5. Jobs created outside of year five may not be claimed unless a new threshold for job creation (year 1) is met. Qualified companies can claim a tax credit with a value of $750—$3,500 per job, per year, beginning with the first taxable year in which the new job is created and for the following four years the job is maintained. An additional $500 credit is offered in counties that participate in a multi-county Joint Development Authority. Increased job tax credits, equal to Tier 1 credits, are also allowed for companies that create jobs in Less Developed Census Tracts, Opportunity Zones (OZ) or Military Zones (MZ). OZs, MZs and Georgia’s 40 least developed counties offer job tax credits to businesses of any nature. Credits may be taken against 100 percent of state corporate income tax liability in Tier 1 & 2 counties, or 50 percent of state corporate income tax liability in Tier 3 & 4 counties.

• PORT TAX CREDIT BONUS: Available to taxpayers who increase imports or exports through a Georgia port by 10 percent over the previous or base year. Base year port traffic must be at least 75 net tons, five containers or 10 TEUs (20-foot equivalent units); if not, the percentage increase in port traffic will be calculated using 75 net tons, five containers, or 10 TEUs as the base. The port tax credit bonus can be used with either the Job or the Investment Tax Credit program, provided that the company meets the requirements for one of those programs. Port Tax Credits may be used to offset up to 50 percent of the company’s corporate income tax liability. Cannot be utilized with the Quality Jobs Tax Credit and can only be used in Opportunity Zones, Military Zones and Less Developed Census Tracts in limited cases by existing large distribution centers.

o     Port Tax Credit bonus for JOB Tax Credits – an additional $1,250/job credit for taxpayers with qualified increases in shipments through a GA port. The $1,250 is added to the Job Tax Credit.

o      Port Tax Credit bonus for INVESTMENT Tax Credit – increases the Investment Tax Credit to the equivalent of a Tier 1 location regardless of the tier level. The port bonus would therefore be equal to 5 percent of the qualified investment in expenses directly related to manufacturing or providing telecommunication services, with the credit increasing to 8 percent for recycling, pollution control and defense conversion.

• RESEARCH & DEVELOPMENT TAX CREDIT: An incentive to new and existing business entities performing qualified R&D in Georgia. Companies may claim a 10 percent tax credit of increased R&D expenses subject to a base amount calculation: The base amount = Current Year Georgia Gross Receipts x (the average of the ratios of the company’s qualified GA research expenses to GA gross receipts for the preceding three taxable years) OR 0.300, whichever is less. For new Georgia companies or for companies with no prior R&D expenditures in the state, the base amount is 30 percent of the current year’s GA gross receipts.The credit is determined by taking the current year’s qualified R&D expenses, subtracting the base amount and multiplying by 10 percent. The credit is applied to 50 percent of the company’s net GA income tax liability after all other credits have been applied. In the first five years of a newly formed business entity in GA, any excess R&D credit can then be applied to the company’s state payroll withholding. Unused credits can be carried forward up to 10 years from the close of the taxable year in which the qualified research expenses were made.

• MEGA PROJECT TAX CREDIT: Companies that employ at least 1,800 net new employees, and either invest a minimum of $450 million or have a minimum annual payroll of $150 million may claim a $5,250 per job, per year tax credit for the first five years of each net new job position. Credits are first applied to state corporate income tax, with excess credits eligible for use against payroll withholding. Credits may be carried forward for 10 years.

• CHILD CARE TAX CREDITS: Employers who purchase or build qualified child care facilities are eligible to receive GA income tax credits equal to 100 percent of the cost of construction—the credit is spread over 10 years [10 percent each year]. Unused credits from the purchase or construction of a child care facility can be carried forward three years. The child care facility must be licensed by the state.Employers who provide or sponsor child care for employees are eligible for a credit against Georgia income tax equal to 75 percent of the employer’s direct costs. Credits that are related to the operating cost of the facility may be carried forward five years. All child care credits can be used against 50 percent of the taxpayer’s income tax liability in a given year.

• WORK OPPORTUNITY TAX CREDIT PROGRAM (WOTC): Coordinated by the Georgia Dept. of Labor, it is a federal tax credit incentive that the U.S. Congress provides to private-sector businesses for hiring individuals from nine target groups who have consistently faced significant barriers to employment. Among others, target groups include certain TANF (Temporary Assistance for Needy Families) and food stamp recipients, and certain residents of an Empowerment Zone or Rural Renewal County. Participating companies are compensated by being able to reduce their federal income tax liability with a tax credit between $1,200 and $9,000 per qualified employee, depending on the target group. See www.doleta.gov/business/incentives/opptax/

TAX EXEMPTIONS

• SALES & USE TAX EXEMPTION: Qualified equipment purchases or leases are exempt from sales tax when the equipment purchased is used in the manufacturing process. Under certain conditions, primary material handling equipment (in warehouses and distribution centers), computer equipment and Class 100 (or less) clean room machinery, equipment and materials can also be exempted.

• INVENTORY TAX EXEMPTION: Effective January 1, 2011, business inventory is exempt from state property taxes (0.25 mills). Many Georgia counties also exempt from property tax up to 100 percent of qualified raw material, work-in-process and finished goods inventory under Georgia’s local-option “Freeport” law. In most of these counties, distribution center and warehouse inventories are exempt if the inventory is destined to be shipped out of state.

• FOREIGN TRADE ZONE (FTZ): Allows qualified companies to defer, decrease or eliminate duties on materials imported from overseas that are used in products assembled in Georgia.

HIRING, TRAINING & EDUCATION

• HIRING ASSISTANCE: Georgia’s Department of Labor (GDOL) assists companies in recruitment by posting job notices, collecting and screening applications and/or résumés, providing interview space, scheduling interviews and hosting job fairs. GDOL will work with private employment agencies that list jobs with the state.

• QUICK START EMPLOYEE TRAINING: Provides customized training for new employees in skill-based jobs at no cost to qualifying companies. The training program is given to the company for its future use. Quick Start provides training space, instructors and all needed materials related to the program, potentially saving companies millions of dollars in training costs. See georgiaquickstart.org

• GEORGIA WORK READY: Available for companies meeting minimum hiring requirements. GA companies can implement Work Ready two ways—through job profiling and Work Ready Certificates. Work Ready job profiles identify the job tasks and skill levels necessary to be successful in any job. Companies match those profiles to employees’ Work Ready Certificates, which measure core skills, to ensure the right person is placed in the right job. See www.gaworkready.org

• RETRAINING TAX CREDIT: A company’s direct investment in training can be claimed as a tax credit. It is available to all GA businesses that file a GA income tax return. 50 percent of the employer’s direct cost, up to $500 per full-time employee, per approved training program, may be claimed as a credit. The total amount cannot exceed $1,250 per employee per year. Training programs must be approved by the Technical College System of Georgia and must be for quality and productivity enhancements and certain software technologies. This tax credit can be used to offset up to 50 percent of a company’s state corporate income tax liability. Unused credits can be carried forward for 10 years. These credits can be combined with other tax credits.

• GEORGIA’S INTELLECTUAL CAPITAL PARTNERSHIP PROGRAM (ICAPP): The University System of Georgia’s economic development program created by the Board of Regents in 1995 that connects the intellectual resources of GA’s 35 public college and universities to the state’s business community. ICAPP staff and a team of economic development leaders from each campus help Georgia businesses tap into the University System of GA for college-educated employees, access to the latest research and business and operations advice. See icapp.org

ASSISTANCE FOR SMALL BUSINESS & ENTREPRENEURS

• ANGEL INVESTOR TAX CREDIT: An income tax credit for qualified investors who invest in certain qualified businesses in Georgia in calendar years 2011, 2012 and 2013. The credit is claimed two years later, in 2013, 2014 and 2015, respectively. The credit is 35 percent of the investment with an individual investor cap of $50,000 per year. The aggregate annual cap for this program is $10 million. The qualified investor must get approval from the Georgia Department of Revenue before claiming the credit.

• SMALL BUSINESS TAX RELIEF: Allows small businesses making capital investments of less than $410,000 to write off up to $102,000 of those expenses. For capital investments greater than $410,000, the tax write-off is reduced dollar for dollar.

• ENTREPRENUER AND SMALL BUSINESS LOAN (ESB) GUARANTEE PROGRAM: In partnership with the OneGeorgia Authority, the state can provide loan guarantees to spur entrepreneurial growth in specified rural communities throughout GA. The guarantee amounts can range between $35,000 and $250,000, can be used for hard assets or for start-up and working capital and require a 10 percent cash equity injection by the borrower. See onegeorgia.org/programs/esb

• WORK READY REIMBURSEMENTS: Businesses employing fewer than 50 people are eligible to receive $250 (up to $1,250) per certified Work Ready individual hired to assist with hiring and training costs. See www.gaworkready.org

ASSISTANCE FOR GEORGIA’S EXISTING INDUSTRIES

• INVESTMENT TAX CREDIT: Existing Georgia companies that have operated a manufacturing or telecommunications support facility in the state for at least three years, and that make a minimum $50,000 additional qualified capital investment, may claim from 1 to 5 percent (depending on tier status) of the new investment directly related to manufacturing or providing telecommunications services as a tax credit. Higher credits (3 to 8 percent, depending on tier status) are available for investments in recycling or pollution control equipment and for defense plant manufacturing conversion to a new product. Taxpayers must choose either the investment tax credit or the job tax credit. This credit may be applied against 50 percent of state corporate income tax liability and carried forward for 10 years.

• OPTIONAL INVESTMENT TAX CREDITS: Can be taken in lieu of the investment tax credit. The credits range from 6 to 10 percent of qualified capital investment. This credit is available to taxpayers that qualify for investment tax credits, with the minimum investment ranging from $5 million 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 after the year the property was first placed in service, provided the property remains in service. The optional investment tax credit is a calculated risk. Without large increases each year in income tax liability, the usable tax credit could be very small and possibly zero.

• CENTERS OF INNOVATION: Georgia’s six Centers of Innovation provide unique, technology-oriented support to businesses and start-ups in the areas of Aerospace, Agribusiness, Energy, Life Sciences, Logistics and Advanced Manufacturing. Each center provides direct access to university and technical college applied research, commercialization resources, technology connections, matching grant funds, potential investor networks and key government agencies. Client companies are connected with industry-specific experts who are on the leading edge of technology and new ideas. See georgiainnovation.org

• GEORGIA FILM TAX CREDIT: The Georgia Entertainment Industry Investment Act offers an across-the-board flat tax credit of 20 percent based on a minimum investment of $500,000 on qualified productions in the state. An additional 10 percent uplift can be earned by including an imbedded animated GA logo on approved projects. Qualified expenditures include materials, services and labor. Eligible productions include feature films; television movies, pilots or series; commercials; music videos; and certain interactive projects including types of animation, special effects and video game development. The minimum expenditure threshold can be met with one or the total of multiple projects aggregated. The income tax credit may be used against GA income tax liability or the company’s GA withholding. If the production company chooses, they may make a one-time sale or transfer of the tax credit to one or more Georgia taxpayers.