Expanded Georgia Tax Credits: Who Qualifies and How to Get Them

calendar iconSeptember 3, 2020

If you do business in Georgia, you may be able to benefit from legislation that the Georgia General Assembly passed recently. This legislation expands certain tax credits and incentives that are available to qualifying taxpayers.

Georgia Revitalization Zone Tax Credits

Effective January 1, 2018, the Georgia Commissioner of Community Affairs will create a list of Revitalization Zones comprised of vacant downtown areas in Georgia communities with populations of less than 15,000 residents. The goal is for businesses and investors to increase their rates of investment and job creation in these areas as a result of the tax credits. Businesses and investors will have three separate opportunities to claim credits for investments in these revitalization zones. Eligible businesses must be certified by the state and include businesses within the following industries:

  • Manufacturing (NAICS code 31)
  • Retail trade (44-45)
  • Professional, scientific and technical services (54)
  • Accommodation and food services (72)

These credits are nontransferable and may be carried forward for 10 years.

Jobs Tax Credit

A new or existing business that expands its operations in a Revitalization Zone may claim a tax credit for $2,000 per full-time job for a period of five years if it creates at least two new full-time jobs in the zone. The credit will be capped at $40,000 annually.

Revitalization Zone Credits

There are two different revitalization credits from which taxpayers can choose. In one credit, certified investors who acquire and develop property in a designated zone are eligible for a tax credit of 25% of the purchase price, subject to a maximum credit of $125,000. Two full-time jobs must be created or maintained in the zone for the property to qualify for the credit, and credit can be claimed in five equal installments beginning in the year the property is placed in service.

In the other credit, certified investors or certified entities with qualifying rehabilitation expenses incurred in the zone are eligible for a credit of 30% of the purchase price, subject to a maximum credit of $150,000. The credit is taken over three tax years. Two full-time jobs must be created or maintained in the zone to qualify for this credit.

Quality Jobs Tax Credit

Georgia House Bill 265 was enacted on April 25, 2017, making several changes to the state’s Quality Jobs Tax Credit program. Companies qualify for this credit if they create at least 50 new “quality” jobs that pay at least 110% of the county’s average wage. The tax credit benefit ranges from $2,500-$5,000 per eligible new job, depending on the wage level, and can be claimed for five years for each new job that is created over a seven year period. If this credit exceeds the business’s income tax liability, it can be used to offset state withholding tax obligations. Any unused credit can be carried forward for ten years.

Under the bill, employers now have two years to establish the 50 new positions in the state rather than the one year previously allowed. The two-year testing period begins in the year during which the company first pays wages to Georgia employees. However, the additional year only applies to taxpayers who first have wages in the state in a tax year beginning on or after January 1, 2017.

The bill also allows taxpayers who previously claimed the credit and who complete certain expansion projects on or after January 1, 2017, to claim additional credits under this program. In order to qualify for these additional credits, employers must invest a minimum of $2.5 million in purchased or leased real or personal property and create 50 or more new quality jobs.

Rural Hospital Organizations Expenses Credit

Effective January 1, 2017, individuals and corporations that make donations to qualified rural hospital organizations are allowed a credit in determining their Georgia income tax liabilities, provided that the donations are approved by the State Revenue Commissioner. The amount of the credit is based on a percentage of the actual amount the taxpayer gives to the organization in that tax year. For donations by individuals, the amount of the credit is also dependent on the individual’s tax filing status.

Senate Bill 180 amends the original bill to increase the maximum tax credit to $5,000 (from $2,500) for individuals or heads of household, to $10,000 (from $5,000) for those who file as married filing jointly, and to the lesser of 90% (from 70%) of the contribution or 75% of the income tax liability for corporations. Unused credits may be carried forward for five years.

Entertainment Production Tax Credit

This credit is available to businesses that are physically located in Georgia and that are engaged in qualified production activities related to interactive entertainment as approved by the Georgia Department of Economic Development. Qualified activities include the production of:

  • New film, video, or digital projects, such as movie and TV productions
  • Music videos
  • Interactive games
  • Sound recording projects

The credit may be taken against Georgia corporate income taxes and may be carried forward for five years.

Georgia House Bill 199 makes the following changes to the tax credit provisions with respect to qualified interactive entertainment companies:

  1. The sunset date has been removed, making the tax credit permanent;
  2. The required Georgia investment and the required Georgia payroll have both been reduced from $500,000 to $250,000 effective January 1, 2018; and
  3. Certain pre-released games have been added to the definition of qualified production activities.

The bill has also established a new state tax credit for postproduction companies with qualified expenditures of at least $100,000 in a particular year. The credit is effective for tax years beginning on or after January 1, 2018, and can total 35% of qualified production expenditures.

Georgia Musical and Theatrical Productions Credit

Beginning January 1, 2018, production companies engaged in state-certified musical or theatrical productions or recorded performances will be eligible for a refundable tax credit of 15% of qualified pre-approved production expenses incurred in the state. Additional credit will be allowed for production expenses incurred in a tier 1 or tier 2 county. In order to qualify, the production company is required to spend a minimum of:

  • $500,000 for live musical or theatrical performances;
  • $250,000 for recorded musical productions incorporated into or synchronized with a movie, television, or interactive media entertainment; or
  • $100,000 for all other recorded music performances.

The credit may be taken against Georgia income and withholding taxes and may be carried forward for five years.

Action Steps

Do you have any questions about how you could claim these credits? More importantly, do you want to talk about how these credits could fit in with your overall business and tax strategies? Reach out to Anne M. Yancey, CPA, CCIP, Director of the State Credits and Incentives Team. They’re available if you want to have a conversation about how you could qualify for these or other state tax credits.