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Georgia Bill (HB1035) Passes to Reduce or Repeal Various Business Tax Incentives (e.g. R&D Credits)

As reported on June 18, 2020 by the Georgia Chamber of Commerce, the Georgia Senate Finance Committee voted to pass HB 1035 titled “Tax Exemption and Credit Reform Act of 2020” to modify current Georgia business tax law legislation.


This Georgia bill (HB 1035) impacts various tax incentives that may significantly hinder businesses operating in Georgia. If HB 1035 is enacted into law as recently drafted, various tax credits and deduction benefits may be reduced or repealed under HB 1035, including the following outlined below.


Research and Development tax credits (reduced by 25%)

SECTION 18. Said title is further amended by revising subsection (c) of Code Section 48-7-40.12, relating to tax credit for qualified research expenses, as follows:


  • '(c) The tax credit provided in subsection (b) of this Code section shall be [previous 10% modified] 7.5 percent of the excess over the base amount referred to in said subsection; provided, however, that once a taxpayer has earned such tax credit for three consecutive years, an additional 2.5 percent shall be allowed for the amount of the excess over the base amount that exceeds the average of such taxpayer's amount of excess over the base amount that was claimed during its preceding three taxable years."

Low-income housing tax credits (reduced by 50%)

SECTION 8. Said title is further amended by revising paragraph (1) of subsection (b) of Code Section 48-7-29.6, relating to tax credits for qualified low-income buildings, as follows:

  • ”(b)(1) A state tax credit against the tax imposed by this article, to be termed the Georgia housing tax credit, shall be allowed with respect to each qualified Georgia project placed in service after January 1, 2001. The amount of such credit shall, when combined with the total amount of credits authorized under Code Section 33-1-18, in no event exceed an amount equal to 50 percent of the federal housing tax credit allowed with respect to such qualified Georgia project.”

Tax credits for employers providing childcare

SECTION 14. Said title is further amended by repealing paragraphs (7), (8), (9), and (10) of subsection (a), by revising subsection (b), and by repealing and reserving subsections (d), (e), and (f) of Code Section 48-7-40.6, relating to income tax credits for employers providing child care, as follows:


”(b) A tax credit against the tax imposed under this article shall be granted to an employer who provides or sponsors childcare for employees. The amount of the tax credit shall be equal to:

  • (1) Seventy-five 75 percent of the cost of operation to the employer less any amounts paid for by employees during a taxable year, provided that the median salary of such employees does not exceed 200 percent of the United States Department of Health and Human Services poverty guidelines published and in effect as of July 1, 2020; or

  • (2) Fifty percent of the cost of operation to the employer less any amounts paid for by employees during a taxable year for other employers. “

Rural jobs tax credit

SECTION 2. Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by repealing and reserving Code Section 33-1-25, relating to the Georgia Agribusiness and Rural Jobs Act.


Deduction for retaliatory insurance taxes paid to other states

SECTION 3. Said title is further amended by repealing and reserving Code Section 33-8-7, relating to a deduction from taxes of retaliatory taxes paid other states.


Insurance companies who insure houses of worship

SECTION 4. Said title is further amended by repealing and reserving Code Section 33-8-13, relating to exemptions of certain insurance companies from taxes.


Rehabilitation tax credits

SECTION 9. Said title is further amended by repealing and reserving Code Section 48-7-29.8, relating to tax credits for the rehabilitation of historic structures and conditions and limitations.


Clean energy tax credits

SECTION 10. Said title is further amended by repealing and reserving Code Section 48-7-29.14, relating to a tax credit for clean energy property.


Certain tax credits related to manufacturing and telecommunication companies

SECTION 11. Said title is further amended by repealing and reserving Code Section 48-7-40.2, relating to income tax credits for existing manufacturing and telecommunications facilities in tier 1 counties and conditions and limitations.

SECTION 12. Said title is further amended by repealing and reserving Code Section 48-7-40.3, relating to income tax credits for existing manufacturing and telecommunications facilities in tier 2 counties and conditions and limitations.

SECTION 13. Said title is further amended by repealing and reserving Code Section 48-7-40.4, relating to income tax credits for existing manufacturing and telecommunications facilities or manufacturing and telecommunications support facilities in tier 3 or 4 counties and conditions and limitations.

SECTION 15. Said title is further amended by repealing and reserving Code Section 48-7-40.7, relating to optional income tax credits for existing manufacturing and telecommunications facilities in tier l counties and conditions and limitations.

SECTION 16. Said title is further amended by repealing and reserving Code Section 48-7-40.8, relating to optional income tax credits for existing manufacturing and telecommunications facilities in tier 2 counties and conditions and limitations.

SECTION 17. Said title is further amended by repealing and reserving Code Section 48-7-40.9, relating to optional income tax credits for existing manufacturing and telecommunications facilities or manufacturing and telecommunications support facilities in tier 3 or 4 counties and conditions and limitations.


Revitalization zone tax credits

SECTION 20. Said title is further amended by repealing and reserving Code Section 48-7-40.32, relating to revitalization zone tax credits.


Other tax implications include various sales tax exemptions that are also scheduled to be eliminated

See SECTION 5; SECTION 6; SECTION 7; SECTION 19; SECTION 22; SECTION 23; SECTION 24.

If passed and signed into law, the Georgia bill will go into effect January 1, 2021.

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