R&D Tax Credits in Georgia
Can I Claim R&D Tax Credits in Georgia?
Yes, you can claim R&D tax credits in Georgia. The state offers a research and development tax credit program known as the Research and Development Tax Credit.
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Established in 1997, Georgia’s Research and Development Tax Credit (RDTC) offers a financial incentive for companies to invest in innovation within the state. Specifically, the RDTC provides an income tax credit of 10% on the year-over-year growth in qualified research expenses for businesses. This program aims to encourage ongoing research activities and technological advancements by making it financially beneficial for companies to increase their R&D expenditures. Businesses in Georgia can earn a 3% state income tax credit for the increase in their annual research and development expenses, compared to the previous two years. To calculate the credit, the eligible expenses incurred for qualifying R&D activities must be identified and calculated, including wages, supplies, and contract research. The credit must be claimed 25% each year for four years. Accurate records and documentation must be kept to determine eligible expenses.
What are the Potential Benefits of the Georgia R&D Tax Credit?
Qualifying companies can potentially achieve substantial cost savings through the utilization of Georgia R&D tax credits. These benefits encompass:
- Cash Flow Improvement
- Tax Reduction
- Retroactive Credit Claims
- Reduced Tax Rate
$1.6 BILLION
Who Can Claim the Georgia R&D Tax Credit?
Eligible businesses in Georgia’s enterprise zones can claim for R&D tax credit if they meet legal requirements under the state and federal law. The credit requires 3 years of presence in the same enterprise zone, with prorated credit for businesses opening mid-year. Qualifying R&D activities must advance knowledge or improve processes, products or technologies. It even includes C-corporations and pass-throughs.
In Georgia, R&D tax credits are available to companies that engage in qualifying activities to advance knowledge or improve processes, products, or technologies. These must be technological, aid in product development, and involve experimentation. Eligible expenses exclude land, equipment, surveys, customer-specific costs, and government-funded research. Some of the qualifying R&D activities include: Development of new products, Testing and experimentation, Development of prototype, Solving technical problems and the like. Accurate record-keeping is crucial for claiming credits.
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The activities that qualify for the Georgia R&D tax credit are the same ones driving growth in your business.
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10,700
How Do I Claim the Georgia R&D Tax Credit?
If a company doesn’t utilize the full amount of the Research and Development (R&D) Tax Credit, the unused portion can be rolled over for a maximum of 10 years for credits claimed before 1/1/2025. Credits claimed after 1/1/2025 can be rolled over for a for a maximum of 5 years To stake a claim for this credit, businesses must include both Form IT-RD and Federal Form 6765 when submitting their Georgia income tax return for the respective tax year in which the qualified research expenses (QREs) occurred.