The State of Georgia is recognized as one of the most pro-business states in the nation. Both Site Selection Magazine and Area Development Magazine recently listed Georgia as #1 for both business climate and for distribution & supply chain hubs. Georgia is home to the world’s busiest airport, home to headquarters for eighteen Fortune 500 and thirty Fortune 1000 companies, and boasts the best slate of tax credits, incentives, and exemptions of any state in the nation.
Looking back a few years, in 1994 Georgia enacted was is known as the B.E.S.T. (Business Expansion Support Act) legislation, which was and still is a package of tax incentives to accomplish two primary goals: enable Georgia to be more competitive for large economic development projects and to support businesses operating in Georgia by providing financial incentives to upgrade to new technologies, expand businesses, and provide quality training to their employees. One of the nation’s largest economic development projects ever, the Kia Motors $1.26B manufacturing project in West Point, GA, was due in part to the state’s generous package of incentives.
Many may say something like, “well, that’s great if you are Delta Airlines, Home Depot, Georgia Pacific, or Coca Cola, but what will the state do for me and my small business”? Well, the answer to that is plenty!
Small to medium sized businesses have found that their decision to pursue the same incentives that the mega companies are using can help business executives make decisions regarding: hiring new employees, buying new technology, expanding the business, and can also determine profit and loss.
Many of the large mega companies, AT&T for example, have full time staff that calculate and submit paperwork to the State of Georgia to take advantage of the tax credits. However, many small to medium sized businesses, and even some larger companies, utilize specialists who know how to maximize tax savings via the approved tax credits, and work closely with client tax accountants to ensure both compliance and proper reporting.
The best way to determine basic eligibility for tax incentives is to answer a few simple questions;
- Are we a for-profit enterprise that pays a state corporate income tax?
- Are we investing in new technologies, equipment, or facilities?
- Are we utilizing any of the Georgia ports to import or export goods?
- Are we training our people as a result of new technology, equipment, or processes?
If the answer is “yes” to any of these questions, the business should be taking advantage of financial incentives.
Georgia has a one-year look-back provision that allows businesses to take advantage of certain credits missed by one tax year. Furthermore, for large investments that exceed state mandated caps, the state provides a carry forward provision for as many as 10 years to ensure all eligible credits are used. And, tax credits can be used in conjunction with each other to further maximize a company’s tax savings.
These tax credits are extremely generous, and some may attempt to criticize the “giveaway” the state is offering corporations. It’s a fair question, and the answer is that one only needs to look at the tremendous economic growth Georgia has experienced in the last 20 years since the BEST legislation was first enacted. In addition to the obvious benefit to larger companies, small privately held companies have been able to invest in new technologies, be more competitive, and hire more of our citizens, which provides a greater return to our state in the form of tax revenue generated as more people work for higher wages. Plus, communities benefit as they not only experience positive economic growth, but become more competitive for statewide projects that bring exposure and prosperity.
The best way to take advantage of these incentives is to first contact a credentialed tax adviser to ensure taxes are being paid, and that the business is eligible to investigate state tax incentives. Each community in Georgia has an economic development team that consists of city and county economic development officials, an economic development executive at a technical college, chamber of commerce executives, and a regional economic development official from the state that covers a specific geographic area. These are the best contact people businesses can contact to start the process and take full advantage of the incentives that provide avenues to grow and thrive in the State of Georgia.
List of 2018 Georgia Tax Credits
Retraining Tax Credit
Georgia businesses may offset their investment in retraining employees to learn new technologies, equipment, or processes. The credit equals 50 percent of direct training expenses, up to $1,250 credit per employee per year.
Job Tax Credit
A job credit is a tax credit that helps fuel company expansion by rewarding job creation. These credits provide up to $4,000 per job created, but the level of credit is determined by the Georgia Dept. of Community Affairs based upon the geographic location and appropriate incentive level of each individual county.
Quality Jobs Tax Credit
Companies that create at least 50 jobs in a 12-month period – at wages that are at least 10 percent higher than the county average – qualify for a tax credit of $2,500 to $5,000 per job.
Port Tax Credit Bonus
Georgia companies that increase imports or exports through a Georgia port by at least 10 percent can qualify for a bonus tax credit. Two options are offered: an addition of $1,250 to the job tax credit or an adjustment in the investment tax credit.
Research and Development Tax Credit
Existing and new businesses that increase qualified research spending may qualify for an R&D tax credit equal to a portion of that spending increase.
Mega Project Tax Credit
Businesses that employ at least 1,800 “net new” employees and have either a minimum annual payroll of $150 million or make a minimum $450 million investment in Georgia qualify for the mega project tax credit.
Film, Television and Digital Entertainment Tax Credit
Film and television companies may receive a tax credit of up to 30 percent of money spent on production and post-production in Georgia, either in a single production or on multiple projects. Minimum spending is $500,000.
Work Opportunity Tax Credit
Georgia’s Department of Labor administers a federal tax credit to Georgia companies that hire individuals who have faced barriers to employment. The tax credit ranges from $1,200 to $9,600 per qualified employee.
Investment Tax Credit
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 an expansion. As a tier 3 county, Chatham County earned amounts are 1 percent to 3 percent of qualified capital investments of $50,000 or more.
Optional Investment Tax Credit
Optional investment tax credits reward growing companies for making major investments in Georgia. The exact value of the optional investment tax credit depends on three factors: how much is invested, where the investment is made in Georgia and the change in the company’s tax liability.
Child Care Tax Credit
Employers who purchase or build qualified childcare facilities are eligible to receive Georgia income tax credits equal to 100 percent of the cost of construction.
About the author:
Jonathan Warner provides services that enable Georgia companies to take advantage of the Georgia Retraining Tax Credit, along with customized training and OSHA compliance services. As a former member of the Georgia economic development team for almost 20 years, Jonathan assisted clients develop their workforce for compliance, quality, and maximum performance. His experience includes instructional systems design and training program leadership for over 100 key Georgia clients reflecting the manufacturing, aerospace, and service industries. Jonathan holds a master’s degree from the University of Georgia’s School of Leadership and Lifelong Learning in Human Resources and Organization Development, completed the Economic Development Course at the Georgia Institute of Technology, and also completed the Georgia Academy of Economic Development’s leadership program. Jonathan is also an active member of the Cherokee County Chamber of Commerce Workforce Development Council, is president of the Lassiter High School Orchestra Association, and volunteers with the Boy Scouts of America.