Why Local Companies Should Claim the Georgia R&D Tax Credit

Using the Georgia R&D tax credit against payroll withholding

Legislation allows Georgia R&D tax credit to be used against payroll withholding taxes in Georgia.

How does this work, you ask?

If the company is in net operating losses, they can use the credit against payroll tax.  Another benefit of the credit is that if the company has exhausted all of the other credits against 50% of their taxable income and cannot use the R&D credit, they can use the credit through payroll withholding tax reductions.

Unique features of the Georgia R&D tax credit

  • Unused R&D tax credit does carry forward up to 10 years.
  • There is a requirement to file an application with the Georgia Department of Revenue at least 30 days prior to filing the company’s Georgia income tax return, including extensions.
  • The company must wait to receive approval from the State to take advantage of this payroll tax withholding adjustment.
  • A business enterprise that has established eligibility for the research tax credit is allowed a tax credit equal to 10% of the excess of the qualified research expenses over the base amount on their state taxes.
  • The credit taken in any one taxable year cannot exceed 50% of the business enterprise’s remaining Georgia net income tax liability after all other credits have been applied.

If you are interested in claiming the state or federal tax credit, click here to speak with a Swanson Reed specialist.

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