Georgia Jobs Tax Credit Ruling Provides Guidance on Wage Requirement and Transferred Jobs

By: Tracey Stewart, SALT Associate

At a glance

• The main takeaway: The Georgia Department of Revenue published a letter ruling that addressed technical issues under the state’s job tax credit relating to the minimum wage requirement and transferred jobs.
• Assess the impact: Businesses who are relocating to and/or expanding their operations in Georgia should connect with their tax advisor on how they can maximize these tax credits.      
• Take the next step: Aprio’s State and Local Tax (SALT) team can help your business understand the jobs tax credit requirements and determine your eligibility.  

Schedule a free consultation today to learn more!

The full story

The Georgia Department of Revenue (DOR) recently issued a letter ruling addressing two questions related to the eligibility of certain jobs for the state’s job tax credit.[1]

A deeper dive into the job tax credit program

The job tax credit program is a state tax incentive that encourages businesses to create new jobs in Georgia, especially in less developed areas. The program allows eligible businesses to claim a tax credit for each qualifying new full-time employee job. The eligibility requirements and amount of the credit varies depending on the county tier or census tract location of where the job is created. The credit can be claimed against the taxpayer’s, or its owners’, Georgia income tax liability, and in some cases may be credited against the taxpayer’s payroll withholding (for taxpayers running net operating losses).

The rules for qualifying for and calculating the job tax credit are very technical. Taxpayers that do not pay close attention to these rules may be disappointed because they had anticipated that newly-hired employees would qualify for the credit, or they may miss an opportunity to count an employee that they assumed did not qualify. The ruling by the DOR addresses two technical issues — one related to the minimum wage requirement and the other related to the concept of a transferred job.

Issue one: minimum wage requirement

In this situation, the taxpayer had previously hired employees who did not meet the minimum wage requirements for being counted as a new job under the job tax credit. In a subsequent year, based on market demands and inflationary pressures, the taxpayer adjusted salaries such that those employees now met the minimum wage requirement. 

The question asked in the ruling was: Do jobs that did not constitute new full-time employee jobs in prior years become new full-time employee jobs in the current year due to an increase in salary, but without any other change in job function or structure for such positions?

Under the job tax credit statute, a “new full-time employee job” means “a newly created position of employment that was not previously located in this state, requires a minimum of 35 hours a week, and pays at or above the average wage earned in the county with the lowest average wage earned in this state, as reported in the most recently available annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor.”[2] Pursuant to the regulations promulgated by both the DOR and the Department of Community Affairs (both agencies administer the credit), that determination is made “when a new or expanded operation is first staffed.”[3]

Based on this language, the DOR concluded that jobs that did not meet the salary requirement in the year of hire do not become qualifying new full-time employee jobs based on a salary increase.  It is worth noting, however, that the wage requirement must be met each and every year, meaning that an employee who initially satisfies the wage requirement may be dropped from the tax credit calculation if that employee’s wage fails to meet the minimum requirements in a subsequent year.[4]

Issue two: transferred jobs

In this situation, the taxpayer, which operates multiple facilities in different counties (tiers), may hire a new qualifying employee in one location while at the same time it may terminate an employee at another location. The hiring and termination are unrelated to each other.

The question asked in the ruling was: Do jobs constitute new full-time employee jobs or transferred jobs when the organization makes separate and unrelated business decisions to create jobs in one location and to remove similar jobs in another location?

A transferred job, which is not included in the job tax credit calculation, is “a job that is relocated by a business or related businesses from one Georgia establishment to another, or a job that is created by a business or related business that is substantially the same as a previously existing job of such business or related business at a location in Georgia that has ceased operations for six months or less.”[5]

Based on this guidance, the ruling concluded that because the addition of jobs in one location was not caused or affected by the removal of jobs in another, there was no “transferred job” and that the taxpayer could claim a job tax credit for the additional jobs. Since the credit requirements vary based on the county (tiers) or specific census tracts in which a taxpayer may operate, the job tax credit calculation is performed separately for each location.

The bottom line

Businesses that are relocating to Georgia or are establishing or expanding their operations in Georgia should consult with their tax advisors to see if they can qualify for the job tax credit and what they need to do to comply with the requirements and maximize their tax benefits. Aprio’s SALT team has experience with these types of situations and can assist your business to determine its jobs tax credit eligibility. We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.

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[1] Georgia Letter Ruling IT-2024-01 (May 1, 2024). For more information about the state’s job tax credit, please visit the Department of Community Affairs website.

[2] O.C.G.A. § 48-70-40(a)(5) (emphasis added).

[3] Ga. Comp. Rules & Regs. §110-9-1-.01(6)(g) and § 560-7-8-.36(3)(a).

[4] See Ga. Comp. Rules & Regs. §110-9-1-.01(6)(w).

[5] Ga. Comp. Rules & Regs. §110-9-1-.01(6)(q).