CASE STUDYMANUFACTURING FACILITY
Manufacturers in most states receive the most lucrative tax incentives, from job tax credits to sales tax exemptions.
A small manufacturer moved from a Tier 3 county (which offers a credit of $1,750 per job, and is limited to 50% of the GA income tax liability) to a Military Zone location (which offers a credit of $3,500 per job, and can be applied to 100% of either the GA income tax liability or the GA withholding taxes). They added an average of 10 new jobs in Year 1. If they had stayed in the Tier 3 county they would not have met the minimum 15 job requirement, so they would not have earned any job tax credits. By moving to a Military Zone location, they earned a $35,000 credit that works just like cash, and they’re eligible for the same $35,000 credit each year for 4 more years if they maintain the average number of jobs.
FACILITY CASE STUDYNON-MANUFACTURING (BUT QUALIFYING BUSINESS)
In addition to manufacturing, there are other types of businesses that qualify for job tax credits in most states. They are usually limited to certain types of industries, such as warehouse & distribution, tourism, broadcasting, telecommunication, R&D, computer systems design, and several others.
In 2018 a large hotel opened a new facility in a Tier 3 county and hired 200 eligible full-time employees. They filed for a job tax credit (for Tier 3 you earn $1,750 per job for a minimum of 15 jobs) and earned a credit in Year 1 of $350,000, which can be applied to 50% of their GA income tax liability. Due to large depreciation write-offs, they will not generate a GA income tax liability for several years, so they won’t use any of the credits. This company was not aware that they are located within a qualified “Less Developed Census Tract” (which allows for an enhanced version of the job tax credit), and qualified for a $3,500 credit per new job with a minimum of 5 jobs, which could be used against 100% of their GA withholding taxes. This would have generated $700,000 in tax credits and could be used within 4 months of filing their GA return. They are also eligible to earn the $700,000 in credits each year for the next 4 years if they maintain the same average number of jobs. Since the credits can be carried forward for 10 years, this tax credit opportunity would have provided up to $3,500,000 in usable tax incentives for several years.
CASE STUDYEVERYONE ELSE (NOT IN MANUFACTURING OR A QUALIFYING BUSINESS)
The most lucrative incentives in most states are related to jobs, and many are limited to a certain type of industry. However, many states open these incentives to ANY type of company if they meet certain minimum requirements and are located within certain physical areas – specifically Military Zones, Opportunity Zones, and certain rural counties.
In January 2019 a small transportation company opened a new facility in Pooler, GA (which is located in a Tier 3 county, but was designated as a qualified Military Zone on January 1, 2019) with 3 qualified full-time jobs. If they maintain an average of 3 jobs for YE 2019, they will earn a credit of $10,500 every year for 5 years the jobs are maintained, which can be applied against either 100% of their GA income tax liability or GA payroll withholding taxes.