GeorgiaTax Obligations Detailed

In Georgia, employers face federal and state tax obligations, including income tax withholding, unemployment insurance, and new hire reporting.

Georgia Income Tax

• Flat Tax Rate: Georgia uses a flat income tax rate of 5.39% for 2025. This rate is scheduled to decrease by 0.10% annually until it reaches 4.99%.
• Withholding: Employers must withhold state income tax from employee wages and remit it to the Georgia Department of Revenue. Two methods are available for calculating withholding: Method A uses tax tables provided by the Department of Revenue, and Method B utilizes a formula.
• Annual Reconciliation: Employers file Form G1003, the Georgia Employer's Annual Tax Return, by January 31st each year to reconcile withheld income taxes for the preceding year.
• Standard Deductions: For 2025, the standard deduction is $24,000 for married couples filing jointly and $12,000 for single, head of household, and married filing separately filers.
• State Allowance: Georgia offers a $4,000 annual state allowance.

Georgia Unemployment Insurance (SUI) Tax

• Liability: Businesses with a quarterly payroll of $1,500 or more, or those employing at least one worker for 20 different weeks in a calendar year, are generally liable for SUI tax.
• Taxable Wage Base: Only the first $9,500 of each employee's earnings are subject to SUI tax.
• New Employer Rate: New employers pay a 2.7% SUI tax rate. Established employers have rates determined by their experience rating, ranging from 0.04% to 7.56%.
• Reporting and Payment: Tax and wage reports, along with any payments due, are filed quarterly (April 30th, July 31st, October 31st, and January 31st), covering wages paid during each respective quarter. Payments can be made via electronic methods or by mail.
• Deferred Payment: Employers may be able to defer quarterly tax payments of $5.00 or less until January 31 of the following year.

New Hire Reporting

• Requirement: All employers must report new hires and rehires to the Georgia Department of Labor within ten days of their start date.
• Reporting Method: Reporting is typically done online through the state's New Hire Reporting Center. This involves submitting Form NHR electronically.

Other Relevant Taxes

• Federal Taxes: Employers in Georgia must also comply with federal tax requirements, including withholding and remitting federal income tax, Federal Unemployment Tax Act (FUTA) tax, and Federal Insurance Contributions Act (FICA) taxes (Social Security and Medicare).
• Corporate Taxes: Georgia imposes a corporate income tax of 5.75% on taxable net income for corporations operating within the state. S-Corporations typically have this tax passed through to shareholders. A corporate net worth tax may also apply.

Note: This information is current as of February 4, 2025, and is subject to change. Employers should consult with tax professionals or refer to official government resources for the most up-to-date details.

In Georgia, employers deduct federal and state taxes, as well as FICA taxes, from employee paychecks.

Federal Taxes

• Federal Income Tax: The amount withheld depends on the employee's W-4 form and earnings. Rates range from 0% to 37%. Employees can adjust their withholdings at any time.

• FICA Taxes:

  • Social Security Tax: 6.2% of wages up to $176,100 (2025 limit). The employer matches this.
  • Medicare Tax: 1.45% of all wages. The employer matches this. An additional 0.9% Medicare tax applies to employee wages exceeding $200,000, which the employer does not match.

Georgia State Taxes

• Georgia State Income Tax: A flat rate of 5.39% as of 2024. This rate is slated to decrease by 0.10% annually until it reaches 4.99%, provided certain revenue conditions are met. Withholding is based on the employee's G-4 form. Information like filing status (Single, Head of Household, Married) and allowances are used to determine the withholding amount.

Other Deductions

• Pre-tax Deductions: These reduce taxable income and include contributions to 401(k) plans, health savings accounts (HSAs), and flexible spending accounts (FSAs).

• Post-tax Deductions: These are taken after taxes are calculated and might include wage garnishments or charitable contributions.

General Tax Information for Georgia

• Standard Deduction (for 2024, filed in 2025): $24,000 for married filing jointly, $12,000 for single, head of household, and married filing separately.

• Dependent Deduction: $4,000 per dependent as of the information provided for the 2024 tax year.

It's important to note that tax laws and regulations can change. This information is current as of February 4, 2025. Consulting a tax professional for personalized advice is recommended.

In Georgia, the Value Added Tax (VAT) is a significant tax levied on most goods and services.

VAT Rates and Thresholds

• Standard VAT Rate: 18% applies to most goods and services sold in Georgia.
• Zero Rate (0%): Applicable to specific goods and services like exports, international transportation, and certain diplomatic supplies. This means these supplies are exempt, but input VAT can be reclaimed.
• Registration Threshold: Businesses must register for VAT if their taxable turnover surpasses GEL 100,000 (Georgian Lari) within any consecutive 12-month period. Registration becomes mandatory from the date of the transaction that pushes the total over the threshold. A non-resident business with a fixed establishment in Georgia needs VAT registration right when taxable operations begin.
• Non-resident businesses providing digital services to Georgian consumers are also required to register for VAT, regardless of turnover.

VAT Filing and Payment

• Filing Frequency: VAT returns are filed quarterly.
• Filing Deadline: The 20th day of the month following the reporting quarter (e.g., April 20th for January 1st to March 31st).
• Payment Deadline: The last day of the month following the reporting quarter.
• Payment Currency: GEL, USD, or EUR.
• Digital Services: Non-resident providers of digital services to Georgian non-business consumers must register and pay VAT, with returns due quarterly on the 20th of the following month and payment by the last day of the following month.

Exempt Goods and Services

Several categories of goods and services are exempt from VAT, including:

• Financial services
• Goods and services for oil and gas operations
• Certain medical and educational services
• Export of goods and services
• Import and supply of certain medicines.
• Goods for official use by foreign diplomats.

Place of Supply Rules

• Goods: Place of supply is Georgia if goods are located in Georgia at the time of transfer or if shipped from Georgia.
• B2B Services: Where the recipient or their fixed establishment is located.
• B2C Services: Generally, where the supplier or their fixed establishment is located, except certain services (telecommunications, electronic services, advertising, consulting, financial, and insurance services), where it is based on the recipient's location. Specific rules also exist for services related to immovable or movable property, transportation, catering, and leisure activities.

Penalties

Failure to register for VAT or submit returns/payments on time may result in penalties imposed by the tax authorities.

Recent Updates

From 1 October 2021, non-resident businesses supplying digital services to Georgian consumers are VAT registered and liable. Simplified reporting and registration processes apply to these businesses.

As of today, February 4th, 2025, this information is current but may be subject to change.

Georgia offers a variety of tax incentives for businesses and individuals in 2025.

Tax Incentives for Businesses

• Job Tax Credit: This credit offers $1,250 to $4,000 per year, for five years, for each new job created in specific sectors like manufacturing, distribution, or data processing, or for establishing a headquarters in one of those sectors. Businesses must create a minimum number of jobs within a year to be eligible. In certain areas, this credit can also be applied to state payroll withholding.
• Quality Jobs Tax Credit: Available to companies across all industries that create at least 50 "high-paying" jobs (paying 10% above the county average) within 24 months. The credit is $2,500 to $5,000 per job, per year, for five years.
• Work Opportunity Tax Credit (WOTC): A federal program offering tax credits from $1,200–$9,600 to businesses that hire individuals from specific target groups.
• Research and Development (R&D) Tax Credit: Equals 10% of qualified R&D spending in Georgia, less a base amount. This credit can offset up to 50% of net Georgia corporate income tax liability after other credits are applied. Unused credits can be carried forward.
• Rural Zone Tax Credits: Available in designated rural zones for job creation, purchasing, and renovating downtown properties. Businesses must create two full-time equivalent jobs to be eligible. The Jobs Tax Credit is $2,000 per new job annually for up to five years. The Investment Credit is 25% of the purchase price, up to $125,000, for a property within the zone. The Rehabilitation Credit is 30% of qualified rehabilitation costs, capped at $150,000.
• Entertainment Production Tax Credit: Transferable credit for qualified productions based in Georgia. Can be used during the year generated or carried forward for five years.

Tax Incentives for Individuals

• Credit for Taxes Paid to Other States: Provides a credit for Georgia residents who earn income in another state, proportionate to the income earned and taxed there. This prevents double taxation.
• Rural Zone Tax Credits: (See above for details. The jobs credit is also available for individuals in the designated zones.)

Tax Changes Effective in Fiscal Year 2025 (July 1, 2024)

• Personal Income Tax Rate Reduction: Reduced to 5.39%.
• Corporate Income Tax Rate Reduction: Aligned with the personal income tax rate at 5.39%.
• Dependent Exemption Increase: Increased to $4,000 per dependent.

Additional Tax Credits

• Low-Income Housing Credit: Allocable credit received through investment in a qualified partnership. Provides tax credits for investing in affordable housing.
• Historic Rehabilitation Tax Credit: Transferable credit for the rehabilitation of historic properties. Can offset 100% of a taxpayer's liability and any excess credits can be carried forward for ten years.

This information is current as of February 4, 2025, and might be subject to change. For the most up-to-date information, consult with a qualified tax professional or refer to official government resources.