On May 6, 2019, Gov. Brian Kemp signed House Bill 224, amending previously enacted tax legislation concerning the state’s tax credits related to historic rehabilitation, quality jobs, and investment property.
Applicable to taxable years beginning on or after Jan. 1, 2019, companies may utilize the Historic Rehabilitation Tax Credit in the year that the certified rehabilitation structure is placed into service, instead of when rehabilitation was completed. This may be up to two years after the reservation of the credit.
The changes to the Quality Jobs Tax Credit and Manufacturing Investment Tax Credit are applicable to taxable years beginning on or after Jan. 1, 2020. Each credit has been amended to include language regarding a “rural county,” which is defined as a county with a population less than 50,000 with 10 percent or more of the population living in poverty based upon the latest published U.S. Census data. The state will release a list of qualifying rural counties each year by December 31.
Before House Bill 224, taxpayers qualified for the credit by creating at least 50 quality jobs in a 24-month period. This requirement still applies to all taxpayers not located in a designated rural county. Effective for tax years beginning on or after Jan 1, 2020, rural county taxpayers in a Tier 1 county will only need to create at least 10 new quality jobs within one year, while rural county taxpayers in a Tier 2 county will only need to create at least 25 new quality jobs within two years.
House Bill 224 makes several changes to the Manufacturing Investment Tax Credit. It increases the required one-year capital investment amount from $50,000 to $100,000. It also allows taxpayers in designated rural counties to apply for the excess credits, after the 50 percent limitation to income tax liability, to the company’s payroll withholding tax liability of up to $1 million per taxable year. The state has placed an annual cap of $10 million on the credit applied to payroll withholding tax liability for all taxpayers. If the amount of credit exceeds the cap, the state will prorate the credit amount among all applicable taxpayers. The credit will sunset on Dec. 31, 2024.
Companies should be aware of the changes to Georgia’s credits for historic rehabilitation, quality jobs, and investment property. In particular, the addition of a rural county designation could provide new and expanded credit opportunities for taxpayers that may not have otherwise met the criteria necessary to be eligible. Companies should consult with their state and local advisers to evaluate eligibility for these credits following the changes effective with the 2019 and 2020 tax years.