Essential Changes to the Georgia Investment Tax Credit

Atlanta area business owners who have taken advantage of the Georgia Investment Tax Credit, particularly those who have relied on long carryforward periods, should be aware of changes that have been made to the credit that took effect on January 1, 2025. House Bill 1181, passed in May 2024, brings significant changes to several Georgia tax credit programs, including the Investment Tax Credit. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key changes, including the adjusted carry forward limits below.

What is the Georgia Investment Tax Credit?

The Georgia Investment Tax Credit is an incentive currently being offered by the state to provide opportunities for industrial and telecommunications companies to earn tax credits for qualified investments.  Manufacturing businesses, or those that offer telecommunications support, can earn investment tax credits if they have been operating in Georgia for 3 or more years. These credits can be used for expansions or upgrades to the business. The value varies between 1-8% of qualified capital investments of $100,000 or more per project or location per tax year.

How is the credit determined?

Outside of the rules around operating in Georgia, businesses also need to have made qualified investments in the state. This can look like:

• Recycling equipment
• Pollution control
• Converting manufacturing facility from a defense plant to a new product
• Investing in general equipment for telecommunications or manufacturing businesses

The first three categories are eligible for 3-8 percent of capital outlay, whereas the last category can qualify for a tax credit between 1-5%. The exact percentage will be determined by the geography of a company. Businesses in Tier 1 and Tier 2 locations, for example, will receive higher-percentage incentives compared to Tier 3 and Tier 4. This business incentives map can be used to determine the tier level of a given area.

What’s the limit for what a business can get in tax credits?

Up to 50% of the corporate income tax liability for a company in Georgia can be offset by the investment tax credit. Any unused credit amount, if it exceeds the 50% limit, can be rolled over to future years. Before 2025, the rollover period was 10 years, but as of January 1, the carryforward period will only be 5 years. The same applies to other tax credits in the state, including the jobs tax credit, research tax credit, and research fund investment credit.

The excess tax credit used to be able to be applied to a credit against tax withholding for businesses in Tier 1 and Tier 2 areas with a rural county designation; however, this was repealed as of December 31, 2024. Business owners should take note of these changes to withholding and carryover limits, as it may substantially change the company’s tax planning strategy.  

Can this credit be used alongside the Job Tax Credit?

As mentioned, Georgia also has other incentives, including the job tax credit. It’s important to know that the investment tax credit cannot be used alongside the job tax credit. Only one can be chosen, so it’s a good idea to consult a tax expert to decide which incentive is most advantageous for your business.

How can a business claim the Georgia Investment Tax Credit?

If businesses meet the requirements, they can apply to the Georgia Department of Revenue. This application will contain a project plan and a capital expenditure budget. The GA DOR will send an approval letter to confirm the tax incentive is applicable. This application needs to be filed via Form IT-WHRZ-APP via the Georgia Tax Center.

Contact Us

The tax saving opportunities available through the Georgia Investment Tax Credit and other programs provide a compelling savings opportunity for qualified companies. If you have questions about the information outlined above, or need assistance with another tax issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.