Georgia Corporate Income Tax: A Business Compliance Overview

Georgia imposes a corporate income tax on the earnings of businesses operating within its borders. This tax is calculated on a corporation’s net income attributable to its activities in the state. For taxable years beginning on or after January 1, 2025, the corporate income tax rate is a flat 5.19%. This means the same rate applies regardless of a corporation’s income level, and it applies to corporations that derive income from property owned or business conducted in Georgia.

Determining Filing Requirements

A corporation’s obligation to file a Georgia income tax return is established through “nexus,” a sufficient connection to the state for tax purposes. A corporation has nexus if it engages in activities for financial profit in Georgia. This connection can be created through a physical presence, such as owning property or having employees in the state. However, a physical footprint is not required, as nexus can also be established economically by deriving income from sources within Georgia.

These rules apply to C corporations, which must file a Georgia return if they have nexus. S corporations also file a return, Form 600S, but the income is not taxed at the entity level. Instead, profits and losses are passed through to individual shareholders, who report the income on their personal state tax returns.

Calculating Georgia Taxable Income

The calculation for a corporation’s Georgia tax liability begins with its federal taxable income, taken from the federal Form 1120. This figure is the starting point before a series of state-specific adjustments are made. These additions and subtractions account for differences between federal and Georgia tax law to determine Georgia’s taxable net income.

Additions to Federal Income

Certain deductions allowed on a federal return must be added back to the income base for Georgia tax purposes. For instance, state and local income taxes deducted on the federal return must be added back, as Georgia does not permit a deduction for its own income tax or those paid to other states. Another addition relates to depreciation. If a corporation claimed federal bonus depreciation, that amount must be added back to its income for Georgia purposes, as state law has not always conformed to federal rules. Expenses related to certain intangible assets paid to a related party may also need to be added back.

Subtractions from Federal Income

Other items can be subtracted from the federal income base to lower the income subject to Georgia tax. A common subtraction is interest income received from U.S. government obligations, such as Treasury bonds, which is exempt from state income tax. Corporations may also subtract certain types of dividend income, including dividends received from other corporations that have already been taxed by Georgia. Additionally, if a corporation had to add back depreciation in a prior year, it may be able to subtract a portion of that depreciation in subsequent years.

Apportionment for Multistate Corporations

When a corporation operates in multiple states, it must determine what portion of its total income is subject to Georgia’s tax. Georgia uses a single-factor apportionment formula based entirely on gross receipts, which differs from the three-factor formulas used by many states that consider property and payroll. The apportionment factor is calculated by dividing the corporation’s gross receipts from business in Georgia by its total gross receipts from all operations. Gross receipts are the total amount realized from sales of tangible personal property shipped or delivered to customers inside the state. This approach benefits companies with significant property and payroll in Georgia but a large volume of sales to customers outside the state.

To illustrate, if a corporation has $20 million in total gross receipts and $4 million are from sales to Georgia customers, its apportionment factor is 20%. This factor is then applied to the corporation’s total taxable net income to determine the amount of income taxable by Georgia.

Available Tax Credits

After calculating its tax liability, a corporation may reduce the amount it owes by claiming tax credits. Unlike deductions, which reduce taxable income, credits provide a dollar-for-dollar reduction of the final tax liability. Georgia offers several credits to incentivize specific business activities, including:

• Jobs Tax Credit: Provides a credit for each new full-time job created by a qualifying business, with the amount varying by county.
• Quality Jobs Tax Credit: Offers a higher credit for jobs that pay at least 110% of the county’s average wage.
• Investment Tax Credit: Available to manufacturing and telecommunications companies that make substantial capital investments in the state.
• Research and Development Tax Credit: Allows companies to claim a credit for a percentage of their increased R&D expenditures.
• Retraining Tax Credit: For costs associated with training employees on new equipment or technologies.

Filing and Paying the Tax

C corporations file their taxes using Form 600, the Corporation Tax Return, which is due by the 15th day of the fourth month following the close of the taxable year. An automatic six-month filing extension is granted if a federal extension is filed; otherwise, a Georgia extension can be requested with Form IT-303. An extension provides more time to file but not to pay, and any tax owed is still due by the original deadline. Returns and payments can be submitted electronically via the Georgia Tax Center or by mail. Corporations expecting a tax liability of $2,500 or more must make quarterly estimated tax payments, due on the 15th day of the following months:

• April
• June
• September
• December