Are R&D Tax Credits Available in Georgia?
Yes. The state of Georgia provides the Research and Development (R&D) Tax Credit which is a valuable benefit for companies developing new products and services. The R&D Tax Credit is available to any company that increases its qualified research spending. New companies, start-ups, and existing and established companies embarking on R&D for the first time or expanding their R&D budget are all eligible for the R&D Tax Credit. Below are the R&D Tax Credit details for the state of Georgia:
- Qualified Research Expenses (QREs) have the same meaning as in IRC § 41, except that such expenses must be for research conducted within Georgia.
- The credit is equal to 10 percent of the excess of the QREs over the base amount.
- The credit can be used to offset up to 50 percent of net Georgia income tax liability after all other credits have been applied.
- Excess R&D Tax Credit can be used against state payroll withholding.
- Any unused R&D Tax Credit can be carried forward for up to 10 years.
- To claim the credit, a company must submit Form IT-RD and Federal Form 6765 with its Georgia income tax return for each tax year in which the QREs were incurred.
Georgia R&D Tax Credit Case Study
A company in Atlanta designs and develops industrial components for the auto industry. The Company started R&D activities in 2018 and is claiming Tax Credits each year for the development activities of its engineers. This project involved a multi-year study covering the tax years 2018 – 2021.
The Company qualified for federal R&D Tax Credits of $247,500 utilizing the Alternative Simplified Method and an additional $195,000 of state R&D Tax Credit in Georgia.
You can read more about this Georgia tax credit case study here.