R&D Tax Credits in Georgia

Georgia offers a Research and Development Tax Credit to companies developing new products and services in Georgia. Georgia adopts the federal definition of qualified research expenses. The R&D project must follow the federal guidelines for being technology-oriented.

Who Qualifies?

To qualify for the Georgia Research and Development Tax Credit, the taxpayer must have  acquired qualified research expenses in Georgia in a taxable year exceeding a base amount and have claimed and received a federal research tax credit for that taxable year.

As stated in the Georgia State Tax Code, a “base amount” means “the product of a business enterprise’s Georgia gross receipts in the current taxable year and the average of the ratios of its aggregate qualified research expenses to Georgia gross receipts for the preceding three taxable years or 0.300, whichever is less; provided, however, that a business enterprise need not have had a positive taxable net income for the preceding three taxable years in order to claim the credit provided.”

Georgia R&D Tax Credit Rate and Limitations

  • The credit rate is 10% of the excess over the base amount and can not exceed 50% of the tax liability.
  • Any unused credit can be carried forward for 10 years.
  • Starting in 2013, companies can use the credit against their payroll tax if the company is in net operating losses.
  • Georgia requires that the taxpayer file an application with the Georgia Department of Revenue at least 30 days before filing their company’s state income tax return, including extensions.  

Case Study

An Atlanta-based company designs and manufactures parts for the aerospace and aviation industry.  The company began claiming both the federal and state R&D tax credit in 2015.  

Summary of credits:

FEDERAL GEORGIA
Year Total QREs Credit Total QREs Total GA Gross Receipts Credit
2016 $880,000 $52,800 $880,000 $680,000 $34,000
2015 $560,000 $33,600 $560,000 $360,000 $18,000
Total $1,440,000 $86,400 $1,440,000 $1,040,000 $52,000

Georgia R&D Tax Credit Forms

The credit is claimed on Georgia Form IT-RD.