Georgia's 7 percent corporate income tax rate applies only to the portion of income that is earned in Georgia. Currently, Georgia is transitioning to a sales only corporate income tax rate. Georgia will be the first state in the Southeastern United States to make this change.

Generally, corporate income tax credits are limited to 50 percent of the taxpayer's state income tax liability for a taxable year, but under some circumstances, may offset up to 100 percent of the income tax or withholding liability. In some instances, tax credits can be stacked, resulting in realized tax savings greater than 50 percent. In most instances, unused tax credits may be carried forward 10 years. Taxpayers are given a choice between job tax credits or investment tax credits.

Computer Equipment Sales Tax Exemption - Computer equipment purchased or leased after January 1, 2001 for use in a Georgia high-technology company, and exceeding the annual threshold of $15 million will be exempt from sales and use tax. High-technology companies are specified as those with SIC 3674, 4812-4813, 4822, 7371-7379, 8711, or 8721-8733.

The term "computer equipment" means any individual terminal or organized assembly of hardware, including but not limited to:

• Central processing units
• Scanners
• Printers
• Electronic data storage devices
• Memory chips
• Data transmission equipment
• Software products including operating systems and library and maintenance routines
• Other related peripheral equipment

Manufacturing Machinery Sales Tax Exemption - Machinery that is purchased or leased for direct use in manufacturing tangible personal property is exempt from sales and use tax when the machinery is:

• Incorporated the first time into a new manufacturing plant located in this state
• Bought to replace or upgrade machinery in a manufacturing plant presently existing in the state
• Incorporated as additional machinery for the first time into a manufacturing plant presently existing in this state
• Incorporated into and used in the construction or operation of a clean room of class 100 or less, provided that such clean room is used directly in the manufacture of tangible personal property (does not include the building or any permanent, non-removable component of the building that houses such clean room)
• Incorporated into any telecommunications manufacturing facility and used for the primary purpose of improving air quality in advanced technology clean rooms of class 100 or less, provided such clean rooms are used directly in the manufacture of tangible personal property

Pollution Equipment Tax Exemption - If a piece of new or replacement equipment has as its primary purpose air or water pollution control, you may receive both sales tax and property tax exemptions. First, submit the appropriate paperwork to the Department of Revenue for sales tax exemption approval. The Department's approval will then entitle you to property tax exemption for that equipment.

Sales and Use Tax Exemptions are available for a wide range of industries. Many Georgia counties exempt up to 100 percent of manufacturer's inventory under the local option Freeport law. In most counties, warehouse inventories are exempt from property taxes if the inventory is destined to be shipped out of state.