Investment Tax Credit
Manufacturing or telecommunication businesses that have operated in Georgia for at least 36 months and that are making a capital investment of $50,000 or more are eligible for an Investment Tax Credit (ITC) that is equal to 1% of their local capital investment. This means that a $1 million dollar capital investment in Columbia County would result in a $10,000 ITC for a given year. A higher ITC (3%) is available for investments in recycled equipment, pollution control equipment, or the conversion of a former U.S. defense facility. ITC’s can offset up to 50% of a company’s state tax liability, and unused credits can be carried forward for up to ten years.
Example: A company makes a $10 million capital investment, with 25% of the investment going towards the purchase of recycled equipment. The company would receive an Investment Tax Credit worth $150,000 in that year [$7.5 million x 1%] + [$2.5 million x 3%] = $150,000.
The Optional Investment Tax Credit works much like the regular Investment Tax Credit described above, only it requires a minimum capital investment of $20 million rather than $50,000 and it is worth 6% rather than 1% of the investment. While the regular ITC can offset up to 50% of a company’s state tax liability, the Optional ITC can offset an amount that is set by a special formula: 90% of the difference between (1) the company’s GA income tax liability for the current year and (2) the company’s base tax liability.
Example: A company’s 3-year average tax liability is $300,000. The Company invests $20 million in Columbia County and is eligible for a 6% Optional ITC ($1.2 million). The company’s income tax liability has increased to $3,300,000 in year 4 and is eligible to receive a $2.7 million tax credit to reduce or eliminate GA income tax liability [$3.3 million - $300,000] x 90% = $2.7 million. The following year (yr 5) the company has tax liability of $5.3 million and is eligible to receive a $4.5 million Optional Tax Credit [$5.3 m - $300,000] x 90% = $4.5 million.
The Port Investment Bonus is available to companies with large increases of shipments into and out of Georgia ports. The port bonus increases a company’s investment tax credit to 5%. The port bonus can offset up to 50% of a company’s State income tax liability, and unused credits may be carried forward up to ten years. See the summary table below to see how Georgia’s Investment Tax Credits work:
|
Georgia’s Investment Tax Credits |
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|
Tax Credit |
Minimum Investment |
Tax Credit |
Credits can Offset… |
Forward Time |
|
Regular ITC |
$50,000 |
1% of Investment |
Up to 50% of State tax liability |
10 Years |
|
Regular ITC w/Port Bonus |
$50,000 |
5% of Investment |
Up to 50% of State tax liability |
10 Years |
|
Optional ITC |
$20,000,000 |
6% of Investment |
Special Formula; see example above |
10 Years |
NOTE: The ITC and the Optional ITC can be received only in lieu of the Job Tax Credit. The JTC and the ITC cannot be utilized in tandem.