Georgia has a 6 percent corporate income tax rate and it applies only to the portion of income that is earned in Georgia.
Single Factor Apportionment
In 2005, Georgia became the first state in the Southeast to adopt a “Single Factor Gross Receipts” apportionment formula. As indicated by its name, the new “Single Factor Gross Receipts” formula will treat a company’s Gross Receipts, or sales factor, as the only relevant factor in determining the portion of that company’s income that is subject to Georgia income tax. Previously, Georgia used a three-factor apportionment formula, but for the 2008 tax year and thereafter, Georgia property and payroll will not factor into the calculation of a company’s corporate income tax. This new single sales factor apportionment formula significantly reduces the effective rate of Georgia income taxation of Georgia-based manufacturing, distribution and service companies with substantial sales to customers outside Georgia.
Example: Assume that, for the 2011 tax year, Dalton Manufacturing Co., Inc. has the following total overall taxable income and gross receipt sales in Georgia as compared to total gross receipt sales:
Taxable Income: $10 million
Percent of Gross Receipts in Georgia: 13%
Accordingly, in 2011, only $1.3 million (.13 x $10 million) of Dalton Manufacturing Co., Inc.’s income would be subject to Georgia’s 6% corporate income tax under the new Single Factor Gross Receipts formula. If the sales in Georgia compared to total sales were less than 13%, then the amount subject to Georgia’s income taxes would also be less. In addition, Georgia does not use the so-called “Throw Back Rule,” under which many states tax income from sales of goods or services to out of state customers if the customer’s state does not already tax that income.
Property taxes are determined by millage tax rates and assessment ratios which vary by location. The only realistic way to compare property taxes from different locations is to use 'effective tax rates' (tax rate multiplied by assessment ratio). Effective tax rates combine city, county, school, and state tax rates into one convenient figure -- the annual tax for each $1000 of property at its fair market value. This rate applies to all property: land, buildings, machinery, equipment, and inventory.
There is a 3% local sales tax in addition to the 4% state sales tax, which combined is one of the lowest sales tax rates in Georgia. Many types of machinery and equipment are exempt from both state and local sales taxes. 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. Visit www.georgia.org for more information on Sales Tax Exemptions.
Energy Sales Tax
Legislation was recently passed that eliminates sales and use tax (local and state) on energy used in manufacturing. This exemption applies to energy used directly or indirectly in manufacturing or processing in a manufacturing plant. The tax will be phased out over a 4-year period starting January 1, 2013 (25% exempt), 2014 (50% exempt), 2015 (75%), 2016 (100% exempt).
Communities have the option to assess an excise tax on energy. Dalton and Whitfield County is committed to being low-tax and DOES NOT have a local excise tax on energy.
State and local incentives are available to lessen the tax burden. To learn more about available incentives, please refer to the tax incentives page.