Georgia Tax Credits
Retraining Tax Credit Georgia Code Title 48-7-40.5
The retraining tax credits is the most widely overlooked, available tax credit. Any and all Georgia businesses are allowed to offset their investment in worker training programs for all businesses that maintain a presence in Georgia. Retraining can relate to new technology implemented, upgrading the company's competitiveness, or new replacement modern equipment. Every year companies spend money on necessary training efforts and Georgia's Retraining Tax Credit allows companies to offset some of these costs by directly reducing their state tax bill.
This credit is 50% of direct training expenses up to $500 credit per training program. Each employee is eligible for up to three classes each calendar year for a $1,250 total annual retraining credit. There is no amount limit per company for retraining tax credits other than the annual tax liability. Retraining tax credits can only be used to reduce the total state liability by 50%. For example, if the total retraining tax credits are $100,000 and the total Georgia tax liability is $190,000, only $95,000 of the current year's $100,000 retraining credit can be used in the current year. However, the remaining $5,000 credit can be carried forward to the next year or the next 10 years and used to offset future tax liabilities.
Eligible expenses used in the calculation of the retraining tax credit can include any and all of the following costs:
In cases where there is a corporate trainer, the time the trainer spends preparing, coordinating and/or teaching qualified courses would be an additional expense. It is possible to allocate all of a full time trainers employee expenses to the retraining credit calculation as long as you stay within the per course, per employee cost limits previously itemized.
Costs not eligible for use in the calculation are sales taxes, training space and/or employee-paid training. The cost of the training or any component of that cost must be born by the company, not the employee.
Employees that are retraining credit eligible must be:
Finally, the program has to be fulling documented as meeting all the different criterion and approved by a Vice President of Economic Development within the Technical College System of Georgia.
We work with client staff to obtain all the data and documentation to have the retraining program certified and approved. We can accept raw data in almost any form to make it more convenient for clients. Then we obtain the approval from the Technical College and deliver what your tax preparer needs for you to benefits from this retraining tax credit.
Job tax credits were designed to help companies expand by rewarding job creation. In 2015, Georgia job tax credits are worth up to $3,500 per net job created and they benefit the qualified company for up to 5 future years. So, if a company qualifies in 2015 by created 10 net new jobs, they benefit with $35,000 of tax credits over the next 5 years, total potential benefit of $175,000. These credits are better than the retraining credits in that you can reduce your entire tax liability to zero. If any credit is left over, it can be carried over to 10 future tax periods to negate future state tax liabilities.
Businesses that qualify for job tax credits are as follows:
NAICS codes are specified in the law for all eligible industries/companies.
There are two other factors that determines the value of Georgia job tax credits:
Each year, in December, Georgia ranks all 159 counties and puts them in Tiers to help determine the value of job credits. The most valuable credits are in the most economic disadvantaged counties as determined an placed in Tier 1. The lower tiers require less net jobs to be created to qualify for the credit. Below is a table that illustrates the value of these credits.
Tier Tax Cr Amt Min. New Jobs Annual Limit
1 $3,500 2 100% of Tax Liability
2 $2,500 10 100% of Tax Liability
3 $1,250 15 50% of Tax Liability
4 $ 750 25 50% of Tax Liability
MZ/OZ $3,500 2 100% of Tax Liability (excess reduces withholding tax)
LDCT $3,500 5 100% of Tax Liability (excess reduces withholding tax)
Note> MZ is a declared military zone. OZ is a declared opportunity zone. LDCT is a less developed census tract. Tiers 1-4 could be increased by $500 by a local development authority.
So, not only counties are ranks, but other areas within all counties, even Tier 2-4 counties, can have areas designated as military zones (MZ), opportunity zones (OZ) and/or less developed census tracts (LDCT). If your firm fall in one of these three zones the county tier assignment is overridden by the appropriate zone's benefits under the regulation. (See 2015 Map) (See 2014 Map)
Similar to most tax credits, you may amend your previous state tax return and recapture a credit that you failed to claim in the prior year. We help companies analyze these benefits.
Optional Investment Tax Credits Georgia Code Title 48-7-40.7 thru 40.9
Georgia rewards long term significant investments with optional investment tax credits. Considerations used in qualifying and receiving these tax credits depend on three factors:
The first two factors, is again determined by Tiers as follows:
Tier Credit Rate Minimum Investment
1 10% $5 million
2 8% $10 million
3/4 6% $20 million
The Credit Rate is the maximum available tax credit. Year-to-year changes in the firm's tax liability determines how much of this credit can be applied to their state income tax liability. Georgia permits a tax credit of 90% of the change in tax liability.
For example, a company invests $5 million to expand in a Tier 1 county. The average tax liability from the previous 3 years is $200,000. This becomes the base tax liability. This base will be subtracted from the tax liability in the year that the company elects to take the credit. Assuming the tax liability in that year is $300,000. The credit would apply to the current tax liability ($300,000) less the base ($200,000), or $100,000.
The optional investment tax credit is primarily based on growth, the more growth, the more tax credit benefits. In contrast, if the tax liability is shrinking or not growing, the benefits would be less and could be zero. Careful consideration should be exercised prior to choosing this option.
We can assist firms in making these choices to maximize benefits.
Investment Tax Credits Georgia Code Title 48-7-40.2 thru 40.4
Georgia offers investment tax credits to businesses to help encourage business activities in the state and make it more affordable to expand and improve operations within the state. These are mostly offered to the manufacturing or telecommunications industries that have operated within Georgia for at least three years. Investment credits can be from 1 to 8 percent of qualified investments of $50,000 or more. Other than amount, there are two other factors:
As with the jobs credit, the state's less prosperous counties provide the location for larger credits. Investments in recycling equipment, pollution control and/or converting a defense facility to a facility that manufactures a new product provide tax credit benefits of 3 to 8 percent of the investment amount. General equipment investments for manufacturing or telecommunications provide credits of 1 to 5 percent.
These investment tax credits can offset up to 50% of a firm's Georgia income tax liability and unused credits can be carried forward 10 years to future periods and applied to future liabilities. However, a company must choose between the jobs tax credit or the investment tax credit. They cannot benefit from both in a tax year.
We help determine which choice is more beneficial.
Other Georgia Tax Credits Available
There are other more specialized tax credits available in Georgia for mega products, port activity, research & development and film, television and digital entertainment activities. We can help decipher all of these upon request and applicability.
Quality Jobs Tax Credit
The Quality Jobs Tax Credit is another job tax credit that applies to companies when they create jobs that pay higher than average wages. The company must create at least 50 new jobs in a 12 month period that pay at least 10% higher than the county average wage. The amount of the credit per job is based on the percentage that the average wages exceed 110% of county average wage as follows:
Average Wage as
% of County Ave. Tax Credit Per New Job
>= 110% and <120% $2,500
>=120% and <150% $3,000
>=175% and <200% $4,000
200% or greater $5,000
Other considerations/requirements for Georgia's Quality Jobs Tax Credit are as follows: