Georgia Tax Credits: New or Enhanced for 2018

With Georgia’s 2018 Legislative Session officially in the rear-view mirror, there are always new laws that could be potentially important to CPAs and/or their clients. In this article, we’ll look at the tax credits that were signed into law. These credits either had changes made to them during the 2018 session, or they are completely new. They are as follows:

House Bill 217

(Income tax credit; certain scholarship organizations; increase amount of the aggregate cap on contributions)

The total annual CAP of contributions has been increased from $58M to $100M beginning January 1, 2019 for a period of 10 years. Beginning on January 1, 2029, the total annual CAP of contributions then reverts back to $58M. Considering this tax credit regularly hits the total annual CAP of contributions in the first day means this is going to continue to be a very popular tax credit in the years to come. Additionally, this bill has increased the percentages of revenue that Student Scholarship Organizations (SSO) are obligated to turn around for scholarships or tuition grants (from 92% - 96% depending on total dollar amounts of contributions received). Additionally, the new language now in law relating to this credit requires SSO's to fulfill a new annual reporting requirement showing fees and expenses of the SSO. Finally, there is a new audit requirement that requires the state auditor to perform an economic analysis each year and report the findings back to the House Ways and Means and Senate Finance Committees.

House Bill 735

(Income tax credit; expenditures on the maintenance of a railroad track owned or leased by a Class III railroad)

HB 735 aims to create an income tax credit for track maintenance expenditures on owned or leased short line railroads. Short line rails serve as a virtual lifeline to our rural communities, and this measure would incentivize investment in rail infrastructure, boost reinvestment, create jobs and keep rural Georgia connected to the rest of the state.

Second part of the bill is a jobs tax credit for qualified employers (operating a facility that recycles post-consumer waste materials into polyester bulk continuous filament fibers) carpet manufacturer. Said qualified employer would need to create 25 new FTE jobs in the state over a specified period of time. Credit can be carried forward for up to 10 years and cannot be an amount greater than 50% of the qualified employers tax liability.

House Bill 769

(Health; recommendations from the House Rural Development Council; implement)

HB 769 covers changes made to the Rural Hospital Tax Credit. To summarize the changes made:

The limits were kept in statute regarding the individual/joint/partnership expensing limits qualifying for a tax credit for the period of January 1 - June 30. These limits are removed for the period from July 1 - December 31 of the tax year. In the case of a single individual $5,000 - married couple filing jointly $10,000 - member of an llc, shareholder of an S Corp, or a partner in a partnership $10,000.

Credit shall be dollar for dollar - with the total annual CAP of contributions set at $60M.

It’s important to note that there has been a press release by Georgia explaining more details on this credit:

Additionally, there was a notice issued by the IRS dealing with state and local tax deductions. This notice simply states that the IRS will be issuing proposed regulations addressing the deductibility of state and local tax payments for federal income tax purposes.

House Bill 843

(Revenue and taxation; tax credits; include any census tract in a county that contains a federal military installation and industrial park)

Code Section 48-7-40.1 of the Official Code of Georgia Annotated, relating to tax credits for business enterprises in less developed areas, is amended by adding a new paragraph to subsection (c) to read as follows: "(2.1) Any census tract in a county that contains a federal military installation with a garrison of at least 5,000 federal or military personnel combined and also contains an industrial park that is owned and operated by a governmental entity;"