Update on Georgia Tax Credits
Georgia has announced it will be authorizing several taxpayer-friendly changes to its Job Tax Credit. The Job Tax Credit furnishes Georgia businesses with a credit against their Georgia income tax of between $1,250 and $4,000 per qualifying employee. The credit may be used to offset up to 100 percent of Georgia income tax, and any unused amounts may be carried forward up to 10 years. Eligibility for and the amount of the credit is based on the average wage of employees in relation to the average wage in the county in which they are located.
The first change will allow businesses to use their 2019 employee head count to meet the 2020 and 2021 eligibility requirement for the credit. To preserve prior-year employee head counts, taxpayers must apply for such treatment by March 31, 2021, by filing a Notice of Intent (NOI). The NOI will be filed with the Georgia Department of Community Affairs. This provision also will allow taxpayers to use their prior-year employee head count to calculate the amount of the credit, in addition to meeting criteria to qualify for the credit.
The second change will be to allow certain telecommuting employees to qualify for the Job Tax Credit at their establishment locations. The qualifying jobs will be referred to as “telecommuter employee jobs.” To qualify, a “telecommuter employee job” must be a newly created position within Georgia that requires a minimum of 35 hours of paid labor per week and pays at least the average wage in the county with the lowest average wage.
A third change will be to allow businesses involved with the production of personal protective equipment (PPE) to be eligible for an additional credit for jobs involved with the manufacturing of such equipment. The additional credit for PPE-related jobs will be $1,250 per employee in addition to the base Job Tax Credit. Any carryforwards will be subject to a sunset provision on December 31, 2024. To be eligible, an employer must complete monthly schedules calculating the number of jobs engaged in the qualifying activity. To be eligible for inclusion in the credit, an employee must spend at least 50 percent of their time on activities related to the manufacturing and distribution of PPE in Georgia. Jobs may be added or removed on a month-to-month basis as a result of this requirement. Several job functions are eligible for inclusion, including manufacturing, management, sales, and support jobs. This provision is most likely a response to the COVID-19 pandemic and resulting demand for PPE.
Taken together, these updates will allow many businesses to become or stay eligible for the Jobs Tax Credit and increase the amount of the credit for many taxpayers. The provisions are no doubt a response to the COVID-19 pandemic and the resulting economic instability that many businesses and low-skilled workers have faced as a result.
For additional guidance on the new credit, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.