Optional investment tax credits can provide a long-term, significant tax benefit that rewards growing companies for making major investments in Georgia.
The exact value of the optional investment tax credits depends on three factors: how much is invested; where the investment is made in Georgia; and the change in a company’s tax liability.
These first two factors - how much and where - can be determined using our downloadable map and the table below. Download the map ▶
The map shows how all Georgia counties and census tracts rank as “economic tiers” based on their unemployment rate, per capita income and percentage of residents whose incomes are below poverty level. After identifying the investment amount and the economic tier (location) in which the investment will be made, companies can calculate the tax credit rate:
|
1 |
10 percent |
$5 million |
|
2 |
8 percent |
$10 million |
|
3 or 4 |
6 percent |
$20 million |
2011 Map of Economic Tiers (PDF)
The “credit calculation rate” above determines the maximum available tax credit. How much of this credit can be applied to state income tax liability in a given year depends on the year-to-year changes in the company’s tax liability.
Georgia allows for a tax credit equal to 90 percent of the change in tax liability. So, suppose a company in 2012 invests $10 million for expansion in a Tier 1 county. To calculate the value of the optional investment tax credit, the company would:
- Identify a base tax liability - a figure determined by the average income tax liability from the previous three years, 2011, 2010 and 2009. Let’s suppose that average comes out to $250,000.
- Subtract this base from the tax liability figure for the year in which the company elects to take the credit. Suppose that year is 2016, and the tax liability for the year is $350,000. The credit would apply to the difference between: 1) that year’s tax liability rate; and, 2) the base tax liability.
$350,000 (2016) – $250,000 (base) = $100,000
$100,000 X 90% = $90,000 credit for 2016
The more a company grows, the greater the tax credits it can claim. However, the opposite is also true: without large increases in income tax liability, the usable tax credit could be small, or possibly zero.
Companies therefore should weigh the risks and potential payoffs of the optional investment tax credit versus the standard investment tax credit.
Download a complete list of regulations governing optional investment tax credits (PDF)
Request more information about sales and use tax exemption by emailing Dana Brewer or by calling +1 404 962 4181.