Are R&D Tax Credits Available in Georgia?

Yes. The R&D Tax Credit is a valuable benefit for companies developing new products and services in Georgia. The R&D Tax Credit is available to any company that increases its qualified research spending. New companies, start-ups, 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 the 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. 

Year
Total QREs
FEDERAL
Credit
Georgia QREs Georgia
Gross Receipts
GEORGIA
Credit
2018 $450,000 $27,000 $450,000 $250,000 $37,500
2019 $575,000 $34,500 $575,000 $400,000 $45,500
2020 $650,000 $39,000 $650,000 $500,000 $50,000
2021 $800,000 $72,917 $800,000 $600,000 $62,000
Total $2,475,000 $247,500 $2,475,000 $1,750,000 $195,000

You can read more about this Georgia tax credit case study here.