Small Business Growth Tax Credit
The Small Business Growth Tax Credit is available to businesses engaged in manufacturing, warehousing & distribution, information processing, telecommunications, tourism, and research & development industries. A company’s state net taxable income must grow by at least 20% for 3 consecutive years. The tax credit amount is equal to the difference between the company’s net taxable income in Years 3 and 2.
Example: A company’s net taxable income increases by 20% for 3 consecutive years. Year 3 net taxable income is $750,000, and Year 2 net taxable income was $500,000. The company would be eligible for a $250,000 Small Business Growth Tax Credit: $750,000 - $500,000 = $250,000.
The credits can be used to offset 50% of a business’s remaining income tax liability after all other tax credits have been applied in a given year. In other words, Small Business Growth Tax Credits can be used in addition to other State tax credits. Unused credits cannot be carried forward. When a business’s income tax liability grows above $1.5 million, it is no longer considered a small business by the State, and it is thus no longer eligible for the credit.
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Georgia’s Small Business Growth Tax Credit |
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Requirement to Qualify |
Forward Time |
Credit can Off-Set… |
$ Amount of Credit |
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3 Consecutive Years of 20% Growth in Net Taxable Income (NTI) |
0 Years |
Up to 50% of State tax liability |
(Year 2 NTI) – (Year 1 NTI) |
** When a company’s Net Taxable Income reaches $1.5 million, they are no longer considered a “small business” and are thus no longer eligible for this tax credit.