Incentives that Move Projects Forward in Columbus

Investment tax credits help Georgia businesses grow by making it more affordable to expand and improve facilities.

Companies in manufacturing or telecommunications support that have operated in Georgia for at least three years are eligible to earn investment tax credits for upgrades or expansions. Credit earned amounts to 1 percent to 8 percent of qualified capital investments of $50,000 or more.

The credit is calculated using two factors:

• Geographic location. Companies in the state’s less prosperous counties receive larger credits.
• Type of investment. Companies that invest in recycling equipment, pollution control or in converting a defense plant manufacturing facility to a new product earn tax credits of 3 percent to 8 percent of their capital outlay. Investment in general equipment for manufacturing or telecommunications services earns tax credits of 1 percent to 5 percent.

Investment tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.

Companies should compare the benefits of the investment tax credit with those of the job tax credit, as taxpayers are allowed to claim one or the other, but not both.

Work Opportunity Tax Credits (WOTC) are federal tax credits awarded to Georgia companies that hire individuals who have consistently faced significant barriers to employment. The Georgia Department of Labor (GDOL) coordinates the WOTC program which provides employers financial incentives when hiring workers from targeted groups of job seekers by reducing an employer’s federal income tax liability. The tax credit can be from $1,200 to $9,600 per qualified employee, depending on the target group. The most frequently certified WOTC is $2,400 for each adult new hire.

Targeted groups include:

• Veterans
• Recipients of the Temporary Assistance for Needy Families (TANF) program
• Recipients of Supplemental Nutrition Assistance Program benefits
• Residents who live within Empowerment Zones or Rural Renewal Counties
• Recipients of vocational rehabilitation from a qualifying agency
• Ex-felons
• Recipients of Supplemental Security Income benefit
• Summer youth employee

Georgia helps companies lower their cost of doing business by offering the ability to purchase various types of goods and services tax free.

Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program.

Businesses can receive a tax credit of 50 percent of their direct training expenses, with up to $500 credit per full-time employee, per training program. The annual maximum of the credit amounts to $1,250 per employee. Eligible expenses include:

• costs of instructors and teaching materials
• employee wages during retraining
• reasonable travel expenses

Retraining tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability.

Any business that files a Georgia income tax return is eligible for the retraining tax credit. To qualify, training programs must be designed to enhance quality and productivity or teach certain software technologies. To qualify for the credit, retraining expenses must be approved by the Technical College System of Georgia.

Research and development (R&D) tax credits are a valuable benefit for companies developing new products and services in Georgia.

R&D tax credits are available to any company that increases its qualified research spending. Brand new companies, existing companies embarking on R&D for the first time, established companies expanding their R&D budget – all are eligible for R&D tax credits.

The tax credit earned is a portion of the increase in R&D spending. The credit can be used to offset up to 50 percent of net Georgia income tax liability, after all other credits have been applied.

Any unused R&D tax credits can be carried forward for up to 10 years. In addition, excess R&D tax credits can be used against state payroll withholding.

The Quality Jobs Tax Credit is another job tax credit for jobs that pay higher-than-average wages. It can give Georgia companies a significant tax break and help drive growth.

The Quality Jobs Tax Credit rewards companies that create at least 50 jobs in a 12-month period – provided the jobs pay wages that are at least 10 percent higher than the county average for wages.

The port tax credit bonus rewards new or expanding Georgia companies that increase imports or exports through a Georgia port by at least 10 percent over the previous or base year.

To be eligible for the port tax credit bonus:

• Companies must first meet the requirements of either the job tax credit or investment tax credit programs.
• Base year port traffic must be at least 75 net tons; or five containers; or 10 TEUs (Twenty-foot Equivalent Units). If base year traffic is lower, then these minimums automatically become the base upon which traffic increases are calculated.

The port tax credit bonus is calculated as follows according to which program it is used with:

Job Tax Credit: An addition of $1,250 (per job) to the job tax credit, which can be taken for five years to reduce or eliminate Georgia corporate income tax liability; or

Investment Tax Credit: An adjustment in the calculation of the investment tax credit, so that the credit amount is based on the equivalent of a Tier 1 location. (5% of the qualified investment expenses or 8% for recycling, pollution control and defense conversion.)

The port tax credit bonus may offset up to 50 percent of the company’s corporate income tax liability. Unused credits may be carried forward for 10 years – but the increase in port traffic must remain above the qualifying threshold, and the company must continue to meet the requirements for either the Job Tax Credit or the Investment Tax Credit.

Note: The port tax credit bonus cannot be used with Georgia’s quality jobs tax credit program.

The Mega Project Tax Credit is available for companies that employ at least 1,800 net new employees, and either invest a minimum of $450 million or have a minimum annual payroll of $150 million.  These qualifying companies may claim a $5,250 per job, per year tax credit for the first five years of each net new job position. Credits are first applied to state corporate income tax, then any excess credits are eligible for use against payroll withholding. Credits may be carried forward for 10 years.

A job credit is a tax credit that helps fuel company expansion by rewarding job creation. In Georgia, job credits provide as much as $4,000 in annual tax savings per job for up to five years. They’re available to businesses (or their headquarters) in seven strategic sectors:

• Manufacturing
• Telecommunications
• Broadcasting
• Warehousing & distribution
• Research & development
• Processing
• Tourism

The exact value of the job credits depends on two factors – how many jobs are created, and where. A downloadable map shows how all Georgia counties and census tracts rank as “economic tiers” based on three factors: unemployment rate, per capita income and percentage of residents whose incomes are below poverty level.

Business inventory is exempt from state property taxes (as of January 1, 2016).  Almost all (93 percent) of Georgia’s counties and over 140 of the cities have adopted a Level One Freeport Exemption, set at 20, 40, 60, 80 or 100 percent of the inventory value.

A Level One Freeport Exemption may exempt the following types of tangible personal property:

• Inventory of goods in the process of being manufactured or produced including raw materials and partly finished goods
• Inventory of finished goods manufactured or produced in Georgia held by the manufacturer or producer for a period not to exceed 12 months
• Inventory of finished goods on January 1 that are stored in a warehouse, dock, or wharf that are destined for shipment outside of Georgia for a period not to exceed 12 months

Local governments can expand the Freeport Exemption and authorize a call for a referendum to approve the creation of a Level Two Freeport Exemption, which would exempt from local property tax any business inventory or real property not covered in the Level One Freeport Exemption, including retail inventory. Like the Level One Exemption, counties and municipalities may choose to implement a Level Two Freeport Exemption at the 20, 40, 60, 80 or 100 percent level.

Film, television and digital entertainment tax credits of up to 30 percent create significant cost savings for companies producing feature films, television series, music videos and commercials, as well as interactive games and animation.

Georgia’s Entertainment Industry Investment Act provides a 20 percent tax credit for companies that spend $500,000 or more on production and post-production in Georgia, either in a single production or on multiple projects.

The state grants an additional 10 percent tax credit if the finished project includes a promotional logo provided by the state. If a company has little or no Georgia tax liability, it can transfer or sell its tax credits.

In an interview with Variety magazine, Broderick Johnson, producer of “The Blind Side,” said, “The magnitude of Georgia’s tax break is one of the best, if not the best in the country.” Johnson’s award-winning film was one of hundreds of projects shot in Georgia in recent years.

In certain instances, the Development Authority may offer reduced pricing to a company that is less than the appraised value and appropriate to the scope of the project.

The Project Management Team is comprised of top officials from the community and the state. The team is committed to working with company officials through the entire selection process, and will remain available to assist a company after decisions and announcements are made.

Freeport inventory tax exemptions of 100% are available for raw materials and goods in process, finished goods held by manufacturers and finished goods held for “out-of-state” shipment.  Application is made annually with the local tax assessor’s office.

This incentive is available only in Columbus, where Muscogee County Technology Park is an extension of Foreign Trade Zone #26. The Georgia Foreign-Trade Zone (GFTZ) establishes and maintains federally-approved Foreign-Trade Zones (FTZ) in Georgia, enabling individuals or companies to import merchandise to specified sites without going through formal customs entry procedures or paying import duties.  Zone users defer and often reduce customs duties.  Advantages to businesses located within these sites include reduced U.S. customs duties and expedited importing processes, as well as cost management and supply chain enhancements.  There are currently 250 general purpose FTZs around the country and goods can move from one FTZ to another without payment of duties.  Once merchandise enters the actual "commerce" of the U.S., duties are paid, often times at a lower rate.

A particular utility may negotiate a reduced rate with a prospective consumer.  Any reduction would be based upon the consumer usage.

An accelerated timeline for obtaining necessary permits and/or provide a reduction in the fees normally assessed for permits may be arranged based upon project scope.

In certain instances, property tax savings (abatements) may be provided by the local community if a company chooses to finance its capital investment (land, building and equipment) using Industrial Revenue Bonds (IRBs). Pursuant to IRB financing, title to the assets is vested in the local Development Authority and the project is leased to the company with the rent being used to pay the bonds. The specific tax abatement is determined by the local board of assessors upon recommendation by the Authority.  Specific information concerning the specific savings associated with this type of financing can be provided.