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Georgia Revamps Quality Jobs Tax Credit Program

With the enactment of House Bill 265, the State of Georgia has passed two significant changes to its Quality Jobs Tax Credit program, effective with tax years beginning on or after January 1, 2017. These changes are:

  • Increasing the hiring period for meeting the job increase threshold, and
  • Implementing a new investment requirement in order to be eligible for subsequent job creation periods.

Prior to HB 265, Georgia law required that a taxpayer must create at least 50 new quality jobs within one year of when the employer first began withholding taxes in Georgia in order to be eligible for the Quality Jobs Tax Credit.1 Effective for tax years beginning on or after January 1, 2017, a taxpayer will now have two years in order to meet the 50 quality jobs requirement if the taxpayer first withholds taxes in Georgia after January 1, 2017.

HB 265 also enacted a new investment requirement in order for taxpayers to be eligible for the extended two year job creation periods. Effective for tax years beginning on or after January 1, 2017, only a taxpayer that completes the creation of a “qualified project” will be eligible for a subsequent seven-year job creation period.2 A “qualified project” is defined as a project meeting the “qualified investment property requirement” and which involves the lease or construction of one or more new facilities in Georgia, or the expansion of one or more existing facilities in Georgia.3

The “qualified investment property requirement” is defined as a minimum of $2,500,000 in qualified investment property purchased or acquired by the taxpayer.4 Qualified investment property includes all real and personal property for use in a qualified project, including land acquisition, improvements, buildings, building improvements, and personal property.5 Property subject to a lease of three or more years may also be included. The qualified investment property must be placed in service by the end of the two-year period which coincides with the job creation requirement.6

A “new quality job” must meet the following criteria: 7

  • It must be located in the state of Georgia;
  • It must have a regular work week of 30 hours or more;
  • It is not a job that is or was already located in Georgia, regardless of which taxpayer the individual performed the services for; and
  • It must pay at or above 110 percent of the average wage of the county in which the job is located.

The Quality Jobs Tax Credit provides an annual credit amount ranging from $2,500 to $5,000 per new job for the creation of quality jobs within the State of Georgia.8 A new quality job paying at least 110 percent of the average wage of the county in which it is located will be eligible for a $2,500 annual credit. A job that pays at least 200 percent or more of the average wage of the county in which it is located will be eligible for the maximum $5,000 per job credit. The chart below depicts the percentage of average county wage requirements and the corresponding amount of annual credit.

Percentage of Average County Wage

Annual Credit Amount

110% or more, but less than 120%

$2,500

120% or more, but less than 150%

$3,000

150% or more, but less than 175%

$4,000

175% or more, but less than 200%

$4,500

200% or more

$5,000

The increase in the job creation period from one year to two years is significant, and is likely to lead to more taxpayers being eligible for the Quality Jobs Tax Credit. Taxpayers should review their job increase plans in light of the new requirements to evaluate if they may now be eligible for the credit.

__________

1 O.C.G.A. Section 48-7-40.17(b)(2016)

2 OCGA Section 48-7-40.17(c) (2017)

3 OCGA Section 48-7-40.17(a)(5) (2017)

4 OCGA Section 48-7-40.17(a)(4) (2017)

5 OCGA Section 48-7-40.17(a)(3) (2017)

6 OCGA Section 48-7-40.17(a)(4) (2017)

7 OCGA Section 48-7-40.17(a)(2) (2017)

8 OCGA Section 48-7-40.17(b)(1)-(b)(5) (2017)

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