Incentives
There’s no doubt about it – business benefits Georgia and its citizens. For this reason, the state has developed an attractive package of incentives designed to ensure that relocating or expanding companies benefit from their decision to locate here. In fact, the state’s recently enhanced incentives make Georgia one of the nation’s most business-friendly states. Although local incentives vary greatly among municipalities, state incentives are numerous, falling into four primary categories.
Corporate Income Tax Reductions
Georgia’s corporate income tax rate is a flat 5.75% and is single factor apportioned: in-state sales.
The Georgia Department of Economic Development describes single-factor apportionment as the percentage of the company’s Georgia taxable income that is subject to Georgia corporate income tax, which is determined by the percentage of a company’s total sales that are made to customers in Georgia. Meaning that, only 20% of a company’s Georgia taxable income will be subject to Georgia’s corporate income tax IF only 20% of a company’s sales were made to customers in Georgia.
Read about these specific programs and descriptions of credits at the Georgia Department of Economic Development
Tax Exemptions
Georgia exempts state taxes on a wide range of expenditures that manufacturers, high-tech companies, and distribution centers have to make for their operations. Below is a list of those exemptions categorized by industry. You can find a full list at the
Georgia Department of Revenue.
Manufacturing
| Exemption |
Description |
| Manufacturing Machinery and Equipment |
Manufacturing machinery and equipment that is integral and necessary to the manufacturing process and used in a manufacturing facility is exempt from sales tax. Qualifying machinery or equipment must be purchased for a new manufacturing facility, as replacement machinery in an existing manufacturing facility, or for the upgrade or expansion of an existing manufacturing facility. [Ga. Comp. R. & Regs. 560-12-2-.62] |
| Repair to Industrial Machinery |
The sale or use of repair or replacement parts, machinery clothing, dies, waxes or tooling for machinery which is necessary and integral to the manufacture of tangible personal property in a presently existing manufacturing plant is exempt from taxation. [Ga. Comp. R. & Regs. 560-12-2-.62] |
| Raw Materials and Packaging |
Materials used for further processing, manufacture, or conversion into components of a finished product; materials coated upon or impregnated into a product being manufactured for sale; and non-reusable materials used to package products for sale or shipment may be purchased tax free. [Ga. Comp. R. & Regs. 560-12-2-.62] |
| Energy Used in Manufacturing |
The sale, use, storage, or consumption of energy which is necessary and integral to the manufacture of tangible personal property at a manufacturing plant shall be exempt from all sales and use taxation except for the sales and use tax for education purposes (typically 1.0%). This includes energy used directly or indirectly in a manufacturing facility. [Ga. Comp. R. & Regs. 560-12-2-.64] |
| Primary Material Handling Equipment |
For manufacturers who have a separate portion of their facility designated exclusively for the material handling function, purchases of the machinery and equipment used to handle, move, or store tangible personal property is exempt from sales and use taxes where the total purchase or expansion is valued at $5 million or more. [Ga. Comp. R. & Regs. 560-12-2-.103] |
| Pollution Control Equipment |
Machinery & equipment used for the primary purpose of reducing or eliminating air and water pollution is exempt. [Ga. Comp. R. & Regs. 560-12-2-.62] |
| Clean Room Equipment |
The sale of machinery, equipment, and materials incorporated into and used in the construction or operation of a clean room of Class 100 or less is exempt from sales tax, if the room is used to produce tangible personal property. The exemption does not include the building of any permanent, nonremovable component of the building that houses the clean room. [O.C.G.A. § 48-8-3(69)] |
Inventory Tax Exemption
Georgia levies no state or real property tax at the State level. Georgia’s Level One Freeport law allows counties and municipalities to enact local property tax exemption on four different types of inventory at 20, 40, 60, 80, or 100 percent of the value. See a full description of the exemption at the
Georgia Department of Revenue.
Foreign Trade Zone
The Foreign Trade Zone (FTZ) program encourages activity at U.S. facilities in competition with foreign locations by allowing delayed, reduced, and sometimes eliminated, duty payment on foreign merchandise admitted to a zone, as well as other meaningful savings. In the global marketplace, many companies consider moving to foreign locations to reduce operating costs. The benefits of the FTZ program may be the competitive advantage a company needs to keep its manufacturing or distribution operations in the United States.
The three international ports of entry in Georgia each have FTZ projects associated with them:
