Georgia R&D Tax Credit

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Documentation is often enough to suffice as proof of qualified expenses. Financial records, payroll records, and invoices are some of the documentation you need to support your qualified expenses.

The Georgia Research and Development Tax Credit, also known as the Georgia R&D credit, provides businesses with a potentially significant tax benefit when research and development business activities are conducted within the state of Georgia. Documentation is often enough to suffice as proof of qualified expenses. Financial records, payroll records, and invoices are some of the documentation you need to support your qualified expenses.

While the Georgia research credit is similar to the IRC § 41 definition, it has some key differences:


  • Qualified Research Expenses are required to be for research in the state of Georgia
  • It is equal to 10% of the excess of the Qualified Research Expenses above the base amount
  • Can offset up to 50% of Georgia income tax
  • Unused R&D credits can be carried forward for up to 10 years
  • Can be used against state payroll withholding (requires application)

You can read more about the Georgia research credit here.

What is the Georgia R&D Tax Credit?

R&D tax credits, also known as the Research and Development credit, enable businesses to potentially reduce their federal income tax or franchise tax. Taxpayers might qualify for the credit if they paid for (or incurred) qualified research expenses.

What are Qualified Research Activities in GA?

Qualified Research Activities can include the below. As mentioned, all qualified activities must take place in the state of GA.

Creating improved products, processes, formulas, software, and techniques
Automating or improving internal manufacturing processes
Designing tools, jigs, fixtures, and molds
Integrating new equipment
Development of data centers, big data, and data mining tools
Integration of APIs and other technologies
Development of financial or pricing models
Manufacturing new or improved products
Developing prototypes, first articles, models
Evaluation of alternative materials
Development of firmware
Network hardware and software development and optimization
Developing simulators
Development of risk management systems
Hiring outside consultants to perform any of the listed activities

Eligibility:
Georgia R&D Tax Credit

Whether your business is a start-up or a large organization, your Georgia business might qualify for the research credit if it paid for:
Developing products for research in Georgia
Services for conducting research in Georgia
The R&D tax credit can be applied to a wide variety of industries that extend beyond research labs and includes startups.

The R&D tax credit can be applied to a wide variety of industries that extend beyond research labs and includes startups.

Find out if you qualify for the Georgia research credit.

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How the R&D Tax Credit Works in Georgia

What Information is Needed?

Properly claiming the R&D tax credit can be difficult without the right expertise - That’s where GOAT.tax comes in. Our R&D tax credit software identifies any qualified research expenses your company paid and qualified research activities to ensure you receive the largest refund possible.

These qualified expenses typically include employee compensation, contracted services, and materials. Typical data needed include payroll records, detailed financial records, vendor expenses, and gross receipts.

Meeting the Four-Part Test

All companies in Georgia (regardless of industry, size, or revenue) that perform these qualified research activities must satisfy the following criteria of the IRS Four-Part Test as outlined in IRC §41(d):

1. Business Component Test
The activity must be related to the performance, quality, reliability, or new or improved function of a business component of the taxpaying company. A business component is defined to be “any product, process, software, technique, formula or invention used by the taxpaying company in trade or business.”
2. Technological Uncertainty Test
The activity must involve the elimination of uncertainty. An activity entails uncertainty if the taxpayer did not know one or more of the following:

  • Whether the desired results could be achieved.
  • The specific means of achieving the desired result.
  • The appropriate design of the business component is being developed.
    3. Process-of-Experimentation Test
    “Substantially all” of the activity must involve a “process of experimentation” involving more than one possible approach toward achieving the result, where the capability or method of achieving the result is uncertain at the outset of the activity.
    4. Technological‐in‐Nature Test
    Activities that are undertaken to discover information must be technological in nature. For example, experiments used to eliminate uncertainty must rely on principles of physical or biological sciences, engineering, or computer science.

    Credit Carryforward

    Unused research tax credits can be carried forward for up to 10 years.

    R&D Tax Credit Calculation Method

    Georgia has a unique state R&D tax credit calculation that compares your current year Georgia qualified expenses and your Georgia gross receipts against the base year period of the prior three (3) years.

    How To Claim Your Georgia R&D Tax Credit

    To claim the Georgia research tax credit, the below forms must be submitted with your income tax return:
    Form IT-RD
    Federal Form 6765

    Georgia R&D Tax Credit From The Experts: GOAT.tax

    GOAT.tax was created for the purpose of educating businesses on the R&D tax credit and assisting companies that qualify for the credit to claim it. Through the 305+ years of collective automating R&D tax credit experience across our nationwide team of over 50 R&D tax professionals, we have been able to take all the guesswork out of this complex tax credit incentive. The experts at GOAT.tax can help your business with automating R&D credit through our innovative platform.
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    Hire US-based engineers, developers, or scientists.
    Designs and develops product prototypes and/or software.
    Performs experimentation and validation on products, manufacturing processes, and/or software.
    None of the above.

    This calculator has been developed utilizing data from a variety of studies conducted in the industries listed. This is only an approximation based on a variety of assumptions and should be treated as such.

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    Based on your responses, we believe that you are not currently eligible for the R&D tax credit.

    Please check back with us if you perform any product or software development-related work in the future.

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