The R&D tax credit equals up to 10 percent of the additional R&D expense over a base amount. The base [detailed below] is computed from the previous three years' taxable income and research expenses.

Example: Taxpayer has base of $192,000. Current year's R&D expense is $5,192,000. Taxpayer is eligible to receive an income tax credit of $500,000 to reduce or eliminate Georgia income tax liability: [$5,192,000 - $192,000] x 10% = $500,000.

R&D tax credits are available to a business engaged in one of the categories to which the jobs tax credit is available (manufacturing, telecommunications, etc. Taxpayer must have positive net income for the previous three years. Taxpayer must qualify for a research credit under Section 41 of the 1986 IRS code to be eligible for the Georgia credit.

R&D tax credits can be used against 50 percent of the remaining income tax liability after all other credits have been applied in a given year. Unused R&D tax credits may be carried forward 10 years. These credits can be added to other tax credits.

The R&D base is the taxpayer's Georgia taxable net income in the current year multiplied by either (a) the average of the ratios of its qualified research expense to taxable net income for the preceding three taxable years, or (b) 30 percent, whichever is less.

Example: Taxpayer spends $100,000 on R&D in a given year and has net taxable income of $1 million. The ratio of R&D to taxable income is 10%. Taxpayer's expense to income ratios for the three preceding taxable years are: 10%, 9%, and 5% respectively. Average of the three ratios is 8%. If current year's income is $2,400,000, the base is 8% x $2,400,000 = $192,000.

2009 Job Tax Credit Map