Incentives are available to businesses (or their headquarters) in seven strategic sectors: manufacturing, telecommunications, broadcasting, warehousing & distribution, research & development, processing and tourism.
The exact value of the job credits depends on two factors – how many jobs are created, and where. A downloadable map shows how all Georgia counties and census tracts rank as “economic tiers” based on three factors: unemployment rate, per capita income and percentage of residents whose incomes are below poverty level.
Augusta-Richmond County is a Tier two county, and also has several Enterprise Zones that have equally aggressive credits. Job tax credits for Augusta-Richmond County amounts to $3,000 per job each year for 5 years for Tier two properties, and $3,500 per job each year for 5 years for Enterprise/Military Zones and Less Developed Census Tract properties.
Click here for Opportunity Zone Map
How the Job Tax Credit Works
Suppose a manufacturer creates 50 jobs in a tier 1 county that participates in a Joint Development Authority with other counties. The value of this job credit would be $4,000 per job. So the company would receive $1 million in tax credits over a five-year period – bringing a $1 million reduction in Georgia income tax. This is calculated as such:
50 jobs x $4,000 credit per job = $200,000 x 5 years = $1 million
Job credits in tier 1 or tier 2 counties can be used against 100 percent of income tax liability. (In tier 1 counties only, the excess over 100 percent is credited to Georgia withholding tax, with a limitation of $3,500 per job.) Tier 3 and tier 4 counties are limited to 50 percent of tax liability in a given year.
The job credits may be carried forward for up to 10 years.
PLUS: Companies creating jobs in certain areas outside tier 1 counties can still receive job credits equal to tier 1 credits.
- Designated Less Developed Census Tracts (LDCTs)
- Opportunity Zones
- Military Zones
And job credits can apply to any business outside the strategic sectors, provided the jobs are created in Opportunity Zones, Military Zones or Georgia’s 40 least developed counties.
Companies should compare the benefits of the job tax credit with those of the investment tax credit, as taxpayers are allowed to claim one or the other, but not both.
Investment Tax Credits
Investment tax credits help Georgia businesses grow by making it more affordable to expand and improve facilities.
Companies in manufacturing or telecommunications support that have operated in Georgia for at least three years are eligible to earn investment tax credits for upgrades or expansions. Credit earned amounts to 1 percent to 8 percent of qualified capital investments of $50,000 or more.
The credit is calculated using two factors:
Geographic location. Companies in the state’s less prosperous counties receive larger credits.
Type of investment. Companies that invest in recycling equipment, pollution control or in converting a defense plant manufacturing facility to a new product earn tax credits of 3 percent to 8 percent of their capital outlay. Investment in general equipment for manufacturing or telecommunications services earns tax credits of 1 percent to 5 percent.
Investment tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.
Companies should compare the benefits of the investment tax credit with those of the job tax credit, as taxpayers are allowed to claim one or the other, but not both.
Retraining Tax Credits
Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program.
Businesses can receive a tax credit of 50 percent of their direct training expenses, with up to $500 credit per full-time employee, per training program. The annual maximum of the credit amounts to $1,250 per employee.
Eligible expenses include:
- costs of instructors and teaching materials
- employee wages during retraining
- reasonable travel expenses
Retraining tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.
Any business that files a Georgia income tax return is eligible for the retraining tax credit. To qualify, training programs must be designed to enhance quality and productivity or teach certain software technologies. To qualify for the credit, retraining expenses must be approved by the Technical College System of Georgia.
Additional questions contact Pam Griffin, Director of Organizational Development with Georgia Quick Start, via email or 1+404-253-2871.
Corporate Headquarters Tax Credit
Companies establishing or relocating their North American or International corporate headquarters [principal central administrative offices] in Augusta-Richmond County are eligible to receive an income tax credit of $5,000 per job per year for five years if the new jobs pay twice the county average wage rate. A $2,500 tax credit is available if the wages are greater than the county average.
The tax credit is available to taxpayers that (1) establish or relocate their headquarters and the headquarters of a subsidiary in Augusta-Richmond County, (2) create 50 or more jobs, (3) invest $1 million, and (4) pay wages that exceed the county average wage rate. Headquarters taxpayer cannot take the job or investment tax credit.
The headquarters tax credit can be used against 100% of tax liability regardless of where the taxpayer locates the headquarters. Credits not applied to income tax liability may be used to reduce withholding tax.
Companies establishing or relocating their headquarters to Augusta-Richmond County may be eligible for a tax credit if the headquarters is defined as the principal central administrative offices of a company. New jobs created at the new headquarters must be full-time and must pay above the average wage.
Examples: Taxpayer locates headquarters in Augusta-Richmond County on a Tier 1 property, creates 160 corporate headquarter jobs paying a wage rate that is greater than the county average; and receives a tax credit of $2 million to reduce or eliminate GA income tax and withholdings liability:(160 x $2,500 x 5 years) = $2 million.
Taxpayer locates headquarters in Augusta-Richmond County, creates 160 corporate headquarter jobs paying over twice the county average wage, and receives a tax credit of $4 million to reduce or eliminate GA income tax and withholdings liability: (160 x $5,000 x 5 years) = $4 million.
Port Job Tax Credit Bonus
The port tax credit bonus rewards new or expanding Georgia companies that increase imports or exports through a Georgia port by at least 10 percent over the previous or base year.
To be eligible for the port tax credit bonus:
Companies must first meet the requirements of 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.
The port tax credit bonus is calculated as follows according to which program it is used with:
Job Tax Credit: An addition of $1,250 (per job) to the job tax credit, which can be taken for five years to reduce or eliminate Georgia corporate income tax liability; or
Investment Tax Credit: An adjustment in the calculation of the investment tax credit, so that the credit amount is based on the equivalent of a Tier 1 location. (5% of the qualified investment expenses or 8% for recycling, pollution control and defense conversion.)
The port tax credit bonus may offset up to 50 percent of the company’s corporate income tax liability. Unused credits may be carried forward for 10 years – but the increase in port traffic must remain above the qualifying threshold, and the company must continue to meet the requirements for either the Job Tax Credit or the Investment Tax Credit.
Note: The port tax credit bonus cannot be used with Georgia’s quality jobs tax credit program.
The Port Tax Credit Bonus for Job Tax Credits
Suppose a company creates 50 jobs in a Tier 1 county and increases its port traffic by at least 10 percent over the previous year. That activity would yield a tax credit of more than $1.3 million over five years:
$4,000 job tax credit + $1,250 port tax credit bonus =
$5,250 total credit per job
50 jobs x $5,250 = $262,500 x 5 years = $1,312,500
The Port Tax Credit Bonus for Investments Tax Credits
Regardless of where a company makes its investment, the port tax credit for that investment is based on Tier 1 location – the location providing the highest tax benefit – when the company qualifies for a port tax credit bonus. The port bonus would be equal to 8 percent of investments in recycling, pollution control and defense facility conversion; and 5 percent of investments in manufacturing or provision of telecommunication services.
Suppose a company invests $100 million in a manufacturing plant and $25 million in recycling equipment in a Tier 4 county – and increases its port traffic by at least 10 percent over the previous year. That activity would reduce the company’s income tax by $7 million:
[$100 million x 5%] + [$25 million x 8% ] = $7 million
Port Tax Bonus Credits are subject to program requirements as outlined in O.C.G.A. § 48-7-40.15.
Tax Form IT-CA 2012
Claim the port tax credit on Schedule 10 of the tax return and attach a schedule to the state income tax return which shall set forth the following information, as a minimum, in addition to the information required under O.C.G.A. § 48-7-40:
- (A) A description of how the base year port traffic and the increase in port traffic was determined;
- (B) The amount of the base year port traffic;
- (C) The amount of the increase in port traffic for the taxable year, including information which demonstrates an increase in port traffic in excess of the minimum amount required to claim the tax credit under this Code section;
- (D) Any tax credit utilized by the taxpayer in prior years;
- (E) The amount of tax credit carried over from prior years;
- (F) The amount of tax credit utilized by the taxpayer in the current taxable year; and
- (G) The amount of tax credit to be carried over to subsequent tax years
Research & Development Tax Credit
Research and development (R&D) tax credits are a valuable benefit for companies developing new products and services in Georgia.
R&D tax credits are available to any company that increases its qualified research spending. Brand new companies, existing companies embarking on R&D for the first time, established companies expanding their R&D budget – all are eligible for R&D tax credits.
The tax credit earned is a portion of the increase in R&D spending. The credit can be used to offset up to 50 percent of net Georgia income tax liability, after all other credits have been applied.
Any unused R&D tax credits can be carried forward for up to 10 years. In addition, excess R&D tax credits can be used against state payroll withholding.
Example: Taxpayer spends $100,000 on R&D in a given year and has net taxable income of $1 million. The ratio of R&D to taxable income is 10%. Taxpayer's expense to income ratios for the three preceding taxable years are: 10%, 9%, and 5% respectively. Average of the three ratios is 8%. If current year's income is $2,400,000, the base is 8% $2,400,000 = $192,000.
Child Care Tax Credit
Child care credits range from 100 percent to 75 percent of costs. Employers who purchase or build qualified child care facilities are eligible to receive Georgia income tax credits equal to 100 percent of the cost of construction. Employers who provide or sponsor child care for employees are eligible for a credit against Georgia income tax equal to 75 percent of employers' direct costs. The credits are available to all businesses in the state. The child care program must be licensed by the state.
All child care credits can be used against 50 percent of taxpayer's income tax liability in a given year.
Unused child care credits from the purchase or construction of a child care facility can be carried forward three years. The credit can be used for the cost of construction over 10 years [10 percent each year]. Credits that are related to the operating cost of the facility may be carried forward five years.
Example: Taxpayer has direct child care cost of $400,000 in a given year; and is eligible to receive $300,000 tax credit (75% x $400,000). Taxpayer invests $1 million in a building for the childcare and is eligible for a credit in the first year of $100,000 (10% x $1 million). Taxpayer can add the $300,000 tax credit and the $100,000 credit if the total credits do not exceed 50% of the tax liability in a given year.
Small Business Fast Growth Tax Credit
Georgia income tax credits are available to a small business in Augusta-Richmond County having Georgia net taxable income growth of 20 percent or more each year for three consecutive years. The credit in year 3 is the difference in the net taxable income of year 3 and year 2. Eligible companies include the same categories that can receive the job tax credit on page 1 except for retail businesses.
Example: Taxpayer's net taxable income increases by 20 percent or more for three consecutive years. In year 3, the net taxable income is $1 million. The net taxable income in year 2 was $300,000. Taxpayer is eligible to receive a $700,000 tax credit: ($1,000,000 - $300,000).
The small business credit can be used against 50 percent of the remaining Georgia income tax liability after all other credits have been applied in a given year. There is no carry forward provision. This process can continue until the taxpayer's Georgia income tax liability exceeds $1.5 million, at which time the taxpayer would no longer be considered a small business. This credit may be combined with other tax credits.
Sales Tax Exemptions
Manufacturing production machinery is exempt from state and local sales tax, as well as machinery or components bought to upgrade or replace existing machinery; additionally, the exemption covers the re-manufacturing of aircraft engines and components.
The concept of exempting production machinery has been extended to warehouses and distribution centers; their primary material handling equipment is exempt from sales tax if the company invests $5 million or more in a new or expanded facility.
Computer equipment that is purchased or leased for use at the facilities of a high technology company is exempt when the total amount of the purchase (or lease) value exceeds $15 million.
Machinery, equipment and materials purchased and used in a clean room of Class 100 or less are exempt. Electricity interacting directly with a manufactured product is exempt if the total cost of the electricity is more than half the cost of all materials used (including electricity) in making the product.
One Georgia Authority
The OneGeorgia Authority is a statewide financial tool to help bridge the economic divide in Georgia. The Authority channels one third of the state's tobacco settlement to economic development projects. Flexible assistance will be provided in the form of loans and grants to support local and regional economic development strategies.
While the authority will support traditional economic development projects, it will also support innovative solutions to local and regional challenges. $1.6 billion is anticipated to be available over the 25-year term of the tobacco settlement.
Augusta-Richmond County is eligible for OneGeorgia Funds through the Augusta Economic Development Authority.
The EDGE (Economic Development, Growth and Expansion) Fund will be utilized when Augusta-Richmond County competes for a business location and/or expansion with another community from outside the State of Georgia.
The Equity Fund will provide financial assistance to communities to help build the necessary infrastructure for economic development.
Equity funds are also available as loans for several different types of projects, such as constructing speculative buildings in order to attract additional industries to these regions.
High Quality Training at No Cost
The Georgia Department of Labor provides employers with free employee recruiting, screening, and training through the Customized Recruitment Program.
Georgia Quick Start is an innovative on-site training program custom-designed to meet the needs of each company prior to plant start-up. Intellectual Capital Partnership Program (ICAPP). ICAPP is a program of four year and advanced degrees, as well as advanced education in specific courses.