The optional investment tax credit can be taken in lieu of the investment tax credit. The credits range from 10 percent to 6 percent of qualified capital investment.

This credit is available to taxpayers that qualify for investment tax credits. The requirements are the same except for the minimum investment ranging from $5 to $20 million [see chart below].

A taxpayer can use the tax credits up to the calculated amount for a given year. The credit may be claimed up to 10 years following the year the property was first placed in service provided the property remains in service.

The optional investment tax credit equals 90 percent of the difference between (1) the taxpayer's Georgia income tax liability for the current year and (2) the taxpayer's base tax liability.

Taxpayer receives a credit equal to 90 percent of the increase in tax liability over the base. The base is the average income tax liability for the three previous years prior to the application.

Example: Taxpayer's 3-year average tax liability is $300,000. Taxpayer invests $125 million, and because it's a tier 1 county, is eligible for a 10% tax credit [$12.5 million]. Taxpayer's income tax liability has increased to $3,300,000 in year 4 and is eligible to receive a $2.7 million tax credit to reduce or eliminate Georgia income tax liability. [$3,300,0000 - $300,000] x 90% = $2.7 million. The following year (year 5) taxpayer has tax liability of $5,300,000 and is eligible to receive a $4.5 million tax credit: [$5,300,000 - $300,000] x 90% = $4.5 million.

The optional investment tax credit is a calculated risk. Without large increases each year in income tax liability, the usable tax credit could be very small and possibly zero.