In 2005, Georgia became the first state in the southeastern U.S. to adopt a Single Factor Gross Receipts Apportionment formula. For many companies, this change resulted in a lower tax bill. For companies who pay state corporate income tax in Georgia, this apportionment formula treats a company’s gross receipts, or sales in Georgia, as the only relevant factor in determining the portion of that company’s income subject to the state corporate income tax rate of 6%.
Today Georgia is one of just 12 states using Single Factor Apportionment. Most states still use a traditional formula in which a company’s in-state property and payroll factor into the calculation of their corporate income tax. Single Factor Apportionment significantly reduces the effective tax rate of Georgia companies with substantial sales to customers outside of Georgia. In addition, Georgia does not use the “Throwback Rule,” which many states use to tax income from sales of goods or services to out of state customers if the customer’s state does not already tax that income.
For example, assume a Georgia company had the following in 2010:
Peaches and Semiconductors, Inc.
|Total||% in Georgia|
|Gross Receipts||$10 million||13%|
Georgia’s change to this new apportionment formula is one of the contributing factors in our state’s top rankings like:
Companies find that the overall costs and barriers to doing business, even beyond the tax calculations and incentives, are exceedingly low in Georgia.
GDEcD’s Corporate Solutions Team, focuses primarily on companies interested in locating Corporate Headquarters and Data Centers in the Southeast.