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Georgia hiring credits
Credits & Incentives talk with Deloitte
“Credits & Incentives talk with Deloitte,” is a monthly column by Kevin Potter of Deloitte Tax LLP, featured in the Journal of Multistate Taxation and Incentives, a Thomson Reuters publication. This edition focuses on the state's hiring tax credits. The amount of hiring credits, along with the various methods for a business to utilize those credits, make Georgia a strong contender for job growth.
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Attracting new jobs in the Peach State
As companies focus on where to locate or expand their businesses, they look at a number of factors, including:
- Access to talent
- Available infrastructure
- Proximity to businesses and services
- Community interest
- State and local tax regime.
In recent years, as companies have considered where to invest, they have increasingly focused on southern states.
One state that has continued to see job growth is Georgia. According to Kiplinger, Georgia has seen growth in a number of industries, including manufacturing, business services, and leisure and hospitality.1 Kiplinger predicts that Georgia job growth will remain consistent at 2.6 percent, adding an expected 108,100 jobs in 2015 and 111,200 jobs in 2016.2
To help drive job growth in the Peach State, Georgia has an active Department of Economic Development (GDEcD). The GDEcD focuses on touting the state's pro-business community, highly skilled workforce, and transportation infrastructure. The efforts of the GDEcD and other organizations have led to a 25 percent increase in jobs in the aerospace sector and a 15 percent increase in jobs in the automotive sector over the past fiscal year.3 This growth was generated both by expansion of existing businesses (69 percent) and projects from businesses investing in Georgia for the first time (31 percent).4
To assist in attracting new jobs, Georgia offers tax credits that companies can use to reduce or potentially eliminate state corporate income tax. Corporate income tax credits may potentially apply to offset as much as 50 percent of a company's state tax liability in a given year, but in some cases they may offset up to 100 percent of corporate income tax as well as payroll withholding tax liability.
While the state of Georgia offers a number of tax credits ranging from the Jobs Tax Credit, to the Research & Development Credit, to the Georgia Film Television and Interactive Entertainment Tax Credit, this article will focus on the state's hiring tax credits.5 City and county governments in Georgia may also offer local incentives.
For a complete list of references, download the PDF.
Excerpts from this month's issue
Job Tax Credit
The Job Tax Credit is a corporate income tax credit that in some instances may also apply to payroll withholding tax. The credit ranges from $750 to $4,000 a year, over a five-year period, for each new full-time job created above the minimum number required. The credit is available to manufacturing, distribution, processing, telecommunications, and certain other types of businesses that are creating net new jobs in Georgia.
The benefits and requirements for the Job Tax Credit depend on the county where the jobs are located. Each county in the state is ranked annually in one of four tiers. Tier 1 is the least developed, Tier 2 is moderately developed, Tier 3 is developed, and Tier 4 is the most developed.6
Businesses creating jobs in the following special zones can receive increased credits (similar to those available under Tier 1):
- Designated Less Developed Census Tracts (LDCT)
- Opportunity Zones (OZ)
- Military Zones (MZ).7
A summary of the benefits, use, carryforward, and minimum net new job requirements for each tier is listed in the accompanying Exhibit 1.8 An eligible business must continue to satisfy the applicable minimum job threshold throughout the five-year period in order to continue to claim the credit.9