Georgia’s tax climate provides a cost advantage before any tax credits are earned. Georgia has a business-friendly approach to the corporate tax structure – from not altering the low six percent corporate income tax rate since 1969, to adopting a single factor gross receipts apportionment formula in 2005.
Single Factor Apportionment
This apportionment formula treats a company’s gross receipts (or sales) in Georgia as the only relevant factor in determining the portion of that company’s income subject to Georgia’s six percent corporate income tax. To many companies, Georgia’s single factor apportionment formula means savings of hundreds of thousands to even millions of dollars over the long term.
Most states still use a traditional apportionment formula in which a company’s in-state property and payroll factor into the calculation of a company’s corporate income tax. Single factor apportionment significantly reduces the effective rate of Georgia income taxation for companies with substantial sales to customers outside Georgia. In addition, Georgia does not use the so-called “throw back rule” that many states use to tax income from sales of goods or services to out-of-state customers.
Example: For the 2014 tax year, assume you have the following total overall taxable income and gross receipt sales in Georgia (as compared to total gross receipts).
Taxable Income: $10 million
Percent of Gross Receipts in Georgia: 5 percent
In 2014, only $500,000 of your income would be subject to Georgia’s six percent corporate income tax, making corporate income tax liability $30,000. [($10 million x 5%) x 6%]
Georgia Department of Economic Development
75 5th Street N.W., Suite 1200
Atlanta, GA 30308
1-800-255-0056 for the hearing impaired
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings. This information was last updated January 2016.