Taxation
Georgia’s 6 percent corporate income tax rate applies only to the portion of income that is earned in Georgia.

Single Factor Apportionment 

In 2005, Georgia became the first state in the Southeast to adopt a “Single Factor Gross Receipts” apportionment formula. As indicated by its name, the new “Single Factor Gross Receipts” formula will treat a company’s Gross Receipts, or sales factor, as the only relevant factor in determining the portion of that company’s income that is subject to Georgia income tax.  Previously, Georgia used a three-factor apportionment formula, but for the 2008 tax year and thereafter, Georgia property and payroll will not factor into the calculation of a company’s corporate income tax. This new single sales factor apportionment formula significantly reduces the effective rate of Georgia income taxation of Georgia-based manufacturing, distribution and service companies with substantial sales to customers outside Georgia. 

Example: Assume that, for the 2009 tax year, In-State Manufacturing Co., Inc. has the following total overall taxable income and gross receipt sales in Georgia as compared to total gross receipt sales:

Taxable Income: $10 million

Percent of Gross Receipts in Georgia: 13%

Accordingly, in 2009, only $1.3 million (.13 x $10 million) of In-State Manufacturing Co., Inc.’s income would be subject to Georgia’s 6% corporate income tax under the new Single Factor Gross Receipts formula. If the sales in Georgia compared to total sales were less than 13%, then the amount subject to Georgia’s income taxes would also be less. In addition, Georgia does not use the so-called “Throw Back Rule,” under which many states tax income from sales of goods or services to out of state customers if the customer’s state does not already tax that income. 

Tax Incentives

To learn more about available incentives, please refer to our latest 2010 Georgia Tax Incentives brochure (PDF - updated 5/10).

Tax Credits
Generally, corporate income tax credits are limited to 50 percent of the taxpayer’s state income tax liability for a taxable year, but, under some circumstances, may offset up to 100 percent of the income tax or withholding liability. In some instances, tax credits can be stacked, resulting in realized tax savings greater than 50 percent. In most instances, unused tax credits may be carried forward 10 years. Taxpayers are given a choice between job tax credits or investment tax credits. For more information on specific tax credits, please visit Georgia Business Development Incentives.

Tax Exemptions
Sales and Use tax exemptions are available for a wide range of industries. Many Georgia counties exempt up to 100 percent of manufacturer’s inventory under the local option Freeport law. In most counties, warehouse inventories are exempt from property taxes if the inventory is destined to be shipped out of state. If you have additional questions, please contact the Georgia Department of Revenue.

GeorgiaFacts.net
GeorgiaFacts.net has detailed information on buildings and sites, industries, communities and more. 

This page was updated 5/7/10.