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TAX CREDITS

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A tax credit is allowed for research expenses for research conducted within Georgia for any business or

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Research Tax Credit.

headquarters of any such business engaged in manufacturing, warehousing and distribution, processing, telecommunications, tourism,

broadcasting or research and development industries. The credit shall be 10% of the additional research expense over the “base amount,”

provided that the business enterprise for the same taxable year claims and is allowed a research credit under Section 41 of the Internal

Revenue Code of 1986. For tax years beginning on or after January 1, 2009, the base amount calculation is based on Georgia gross

receipts instead of Georgia taxable net income. (Note that for tax years beginning b ef o re January 1, 2009, the base amount must contain

positive Georgia taxable net income for all years.) The credit may not exceed 50% of the business’ Georgia net income tax liability after all

other credits have been applied in any one year. Any unused credit may be carried forward 10 years. Excess research tax credit earned in

taxable years beginning on or after January 1, 2012, may be used to offset withholding as provided in the research tax credit regulation.

This credit should be claimed on Form IT-RD. For more information, refer to O.C.G.A. §48-7-40.12.

Headquarters Tax Credit. Companies establishing their headquarters or relocating their headquarters to Georgia prior to January 1,

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2009 may be entitled to a tax credit if the following criteria are met: 1) At least fifty (50) headquarters jobs are created; and 2) within one

year of the first hire, $1 million is spent in construction, renovation, leasing, or other cost related to such establishment or

reallocation. Headquarters is defined as the principal central administrative offices of a company or a subsidiary of the company. The

credit is available for establishing new full-time jobs. To qualify, each job must pay a salary which is a stated percentage of the average

county wage where the job is located: Tier 1 counties at least 100%; Tier 2 counties at least 105%; Tier 3 counties at least 110%; and

Tier 4 counties at least 115%. The company has the ability to claim the credit in years one through five for jobs created in year one and

may continue to claim newly created jobs through year seven and claim the credit on each of those jobs for five years. The credit is

equal to $2,500 annually per new full-time job meeting the wage requirement or $5,000 if the average wage of all new qualifying

fulltime jobs is 200% or more of the average county wage where new jobs are located. The credit may be used to offset 100 percent

of the taxpayers Georgia income tax liability in the taxable year. Where the amount of such credit exceeds the taxpayer’s tax liability in

a taxable year, the excess may be taken as a credit against such taxpayer’s quarterly or monthly withholding tax. To claim the credit

against withholding, a business must file Form IT-WH at least 30 days prior to filing the return on which the applicable jobs are

claimed. Once the income tax return is filed, the Department has 90 days to review the withholding credit being claimed and notify the

business of the approved credit and when and how it may be claimed. This credit should be applied for and claimed on Form IT-HQ.

For more information, refer to O.C.G.A. §48-7-40.17.

For taxable years beginning before January 1, 2010, businesses or the headquarters of any such

Port Activity Tax Credit.

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businesses engaged in manufacturing, warehousing and distribution, processing, telecommunications, broad- casting, tourism, or

research and development that have increased shipments out of Georgia ports during the previous

12-month period by more than 10% over their 1997 base year port traffic, or by more than 10% over 75 net tons, five containers or ten

20-foot equivalent units (TEU’s) during the previous 12-month period are qualified for increased job tax credits or investment tax credits.

NOTE: Base year port traffic must be at least 75 net tons, five containers, or 10 TEU’s. If not, the percentage increase in port traffic will

be calculated using 75 net tons, five containers, or 10 TEU’s as the base. Companies must meet Business Expansion and Support Act

(BEST) criteria for the county in which they are located. The tax credit amounts are as follows for all Tiers:

An additional job tax credit of $1,250 per job; investment tax credit of 5%; or optional investment tax credit of

10%.Companies that create 400 or more new jobs, invest $20 million or more in new and expanded facilities, and increase

their port traffic by more than 20% above their base year port traffic may take both job tax credits and investment tax credits.

The credit is claimed by filing the appropriate form for the applicable credit (job tax: Form IT-CA; investment tax: Form IT- IC or

optional: Form IT-OIT) with the tax return and providing a statement with port numbers to verify the increase in port traffic. For more

information, refer to O.C.G.A. §48-7-40.15.

For tax years beginning on or after January 1, 2010, the following changes apply:

1. “Base year port traffic” means the amount of imports and exports during the second preceding 12 month period. For example, if the

taxpayer is trying to claim the credit for 2010, they would compare 2009 to 2008 and if the increase is more than 10% they would qualify.

NOTE: Base year port traffic must be at least 75 net tons, five containers, or 10 TEU’s. If not, the percentage increase in port traffic will be

calculated using 75 net tons,five containers, or 10 TEU’s as the base.

2. “Port traffic” means the amount of imports and exports.

Bank Tax Credit. All financial institutions that conduct business or own property in Georgia are required to file a Georgia Financial

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Institutions Business Occupation Tax Return, Form 900. Effective on or after January 1, 2001, a depository financial institution with a

Sub S election can pass through the credit to its shareholders on a pro rata basis. For more information, refer to O.C.G.A. §48-7-29.7.

Low Emission Vehicle Credit. This is a credit, the lesser of 10% of the cost of the vehicle or $2,500, for the purchase or lease of a

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new low emission vehicle. Also there is a credit for the conversion of a standard vehicle to a low emission vehicle which is equal to

10% of the cost of conversion, not to exceed $2,500 per converted vehicle. Certification approved by the Environmental Protection

Division of the Department of Natural Resources must be included with the return for any credit claimed under this provision. A

statement from the vehicle manufacturer is not acceptable. A low emission vehicle is defined as an “alternative fuel” vehicle and

does not include any gasoline powered vehicles (i.e. hybrids). A “low speed vehicle” does not qualify for this credit. For more

information, refer to O.C.G.A. §48-7-40.16.

Zero Emission Vehicle Credit. This is a credit, the lesser of 20% of the cost of the vehicle or $5,000, for the purchase or lease of a

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new zero emission vehicle. Also there is a credit for the conversion of a standard vehicle to a zero emission vehicle which is equal to

10% of the cost of conversion, not to exceed $2,500 per converted vehicle. Certification approved by the Environmental Protection

Division of the Department of Natural Resources must be included with the return for any credit claimed under this provision. A

statement from the vehicle manufacturer is not acceptable. A zero emission vehicle is a motor vehicle which has zero tailpipe

and evaporative emissions as defined under rules and regulations of the Board of Natural Resources and includes an electric

vehicle whose drive train is powered solely by electricity, provided the electricity is not generated by an on-board combustion device. A

“low speed vehicle” does not qualify for this credit. For more information, refer to O.C.G.A. §48-7-40.16.

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Form It 611s Instructions - S Corporation Income Tax - Georgia Department Of Revenue - 2014 Page 14

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