Georgia has been dubbed the Singapore of the United States. The state has spurred economic growth by handing out tax credits for companies moving down south. Investment tax credits help Georgia businesses grow by making it more affordable to expand and improve facilities.
Eligibility for Georgia Investment Tax Credits
Companies in manufacturing or telecommunications support that have operated in Georgia for a minimum of three years are eligible to earn investment tax credits for upgrades or expansions.
- Qualified capital investments must be $50,000 or greater.
- Credit amounts range from 1% to 8%.
How Investment Tax Credits Are Calculated
The credit is calculated using two main factors:
1. Geographic Location
Companies in the state’s less prosperous counties receive larger credits.
2. Type of Investment
- Companies investing in recycling equipment, pollution control, or in converting a defense plant manufacturing facility to a new product earn tax credits of 3% to 8% of their capital outlay.
- Investment in general equipment for manufacturing or telecommunications services earns tax credits of 1% to 5%.
Usage of Georgia Investment Tax Credits
- Offset Up to 50% of Georgia Corporate Income Tax Liability:
Investment tax credits can be used to offset up to 50% of a company’s Georgia corporate income tax liability. - Carryforward Provision:
If the earned credit exceeds the 50% limit, the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.
Comparison with Other Tax Credits
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.
Frequently Asked Questions
What are Georgia Investment Tax Credits?
Georgia Investment Tax Credits are financial incentives provided to companies in manufacturing or telecommunications support sectors. These credits help offset the costs of facility upgrades or expansions by reducing a business’s state income tax liability.
Who qualifies for Georgia’s investment tax credit?
To qualify, a business must operate in the manufacturing or telecommunications support sector and have been active in Georgia for at least three years. Additionally, qualifying investments must be at least $50,000.
How much can a company earn through these credits?
Credit amounts range from 1% to 8%, depending on the company’s location and the type of investment made. For example, environmentally focused or defense conversion investments tend to earn higher credits.
How are investment tax credits applied?
These credits can offset up to 50% of a company’s Georgia corporate income tax liability in a given year. Any unused credits can be carried forward and applied for up to 10 years.
Can a business claim both investment and job tax credits?
No, businesses must choose between claiming the investment tax credit or the job tax credit. They cannot claim both for the same project or tax year.