Georgia Tax Credits and Incentives
Job Tax Credit provides a state tax credit for up to five years after creation of new jobs, as long as the jobs are maintained. The tax credit is available to businesses engaged in manufacturing, warehousing and distribution, processing, telecommunications, broadcasting, tourism, and research and development industries. The amount of the credit and the number of jobs that must be created depend on the county in which the jobs are located. The number of jobs necessary to generate the credit can be as low as two.
Each county is assigned a certain "Tier". In Tier 1 and Tier 2 counties, job credits can be used against 100% of income tax liability. As an additional incentive, in Tier 1 counties, the excess over 100% is credited to GA withholding tax, with a limitation of $3,500 per job. Tier 3 and Tier 4 counties' tax credits are limited to 50% of the income tax liability in a given year. Depending on the Tier, the credit amount ranges from $1,250 to $4,000 per job.
The credit may be claimed for eligible new full-time, permanent jobs (a full-time job is defined as 35 hours or more per week). This includes leased employees. The average wages for these new jobs must be above the average wage of the county that has the lowest average wage of any county in the state. Employers must make health insurance coverage available to employees filling the new full-time jobs; however, employers are not required to pay all or part of the cost of such insurance unless the benefit is provided to existing employees.
Certain areas throughout the state are designated as Opportunity Zones, Military Zones, or Less-Developed Census Tracts. If a taxpayer falls into one of these zones, the taxpayer qualifies for Tier 1 treatment and is eligible for a credit of $3,500 per job.
Quality Jobs Tax Credit provides a tax credit for jobs that pay higher-than-average wages. The credit rewards companies that create at least 50 jobs in a 12-month period, provided that the jobs pay wages that are at least 10 percent higher than the county average. These quality jobs must be created within seven years of initial eligibility in order to qualify for the credit. The credit can be used to offset 100 percent of corporate income tax, and after that, it can be used to offset payroll withholding. Depending on the level of wages compared to the county average, the credit ranges from $2,500-$5,000 per job, per year, for up to five years. New jobs that do not meet the requirements for the Quality Jobs Tax credit may count toward the Jobs Tax Credit Program if they meet the eligibility requirements for that program separately.
Employer Retraining Tax Credit provides a state tax credit of half the cost of training for a full-time (employed for a minimum of 25 hours per week) employee up to a maximum of $500 per person in each training program and up to $1,250 per employee per year. The retraining applies to virtually any training of existing employees resulting from new technologies and workplace changes. To be eligible for the credit, employees must be: Georgia residents, first-line employees or immediate supervisors, and continuously employed with the company for a minimum of 16 weeks.
Investment Tax Credit provides a tax credit for certain taxpayers that invest in new or expanded facilities within the state. The credit is available to manufacturing or telecommunications companies that have operated in Georgia for at least three years. The amount of credit varies according to the geographic location and type of investment. The credit ranges from one to eight percent of qualified capital investments of $50,000 or more.
Optional Investment Tax Credit provides a state tax credit for certain taxpayers that invest in new or expanded facilities within the state. It is similar to the regular Investment Tax Credit; however, there are higher spending thresholds. Companies with projects of $5 million to $20 million may qualify, depending on where the investment is made.
Port Tax Credit Bonus rewards new or expanding Georgia companies that increase imports or exports through a Georgia port by at least 10% over the previous or base year. To be eligible, companies must first meet either the job tax credit or investment tax credit programs. Base year port traffic must be at least 75 net tons; or five containers; or 10 TEUs (Twenty-foot Equivalent Units). If base year traffic is lower, then these minimums automatically become the base upon which traffic increases are calculated.
Research and Development Tax Credit is similar to the federal tax credit mentioned above. The tax credit can be used to offset up to 50% of net Georgia income tax liability, after all other credits have been applied. Any unused credits can be carried forward for up to 10 years. Excess R&D tax credits can be used against state payroll withholding.
Land Conservation Tax Credit provides for an income tax credit for the qualified donation of real property that qualifies as conservation land. Taxpayers will be able to claim a credit against their income tax liability not exceeding 25 percent of the fair market value of the donated property, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value. The credit can be up to $250,000 for individual donors and $500,000 for corporate and partnership donors.
Qualified Education Expense Tax Credit allows eligible private citizens and corporations to receive tax credits for donations to Student Scholarship Organizations (SSOs). A corporation is eligible for a credit amount that can equal up to 75% of its income tax liability. Any excess can be carried forward for five years. A taxpayer filing single or head of household can get a credit for up to $1,000 per tax year; married filing jointly gets up to $2,500 per tax year, and married filing separately gets up to $1,250 per tax year. The credit is allowed on a first-come, first-serve basis. The taxpayer must add back to Georgia taxable income that part of any federal charitable contribution deduction taken on a federal return for which a credit is allowed. Taxpayers must request preapproval to claim this credit.
Basic Skills Education Tax Credit program is designed to promote employer participation and sponsorship or activities that increase educational attainment and the acquisition of a GED credential by employees. There is a credit of $400 for each employee who passes the GED test which was paid for by the employer, or $1,200 for each employee who completes a 40-hour class while being compensated at his or her normal rate of pay, then passes the GED test which was paid for by the employer. An individual employee can only be included in one of the two aforementioned categories.
Qualified Health Insurance Expense Credit provides an employer (who employs 50 or fewer directly or on Form 1099) a tax credit for qualified health insurance expenses in the amount of $250 for each employee enrolled for 12 consecutive months in a qualified health insurance plan. Qualified health insurance means a high-deductible health plan that includes at a minimum, catastrophic health care coverage which is established and used with a health savings account. The qualified health insurance must be available to all employees. The total amount of the tax credit for a taxable year cannot exceed the employer’s income tax liability.