What is the Quality Job Tax Credit
According to the National Conference of State Legislature, Georgia’s unemployment rate has improved from 7.3% in January 2014 to 5.5% as of December 2015 ( the new state unemployment rates are scheduled to be released March 14th). In an effort to keep the state’s unemployment rates in decline, Georgia State Officials have adopted several aggressive job tax credits for businesses. One of those job tax credits is the Quality Jobs Tax Credits. The goal of the Quality Job Tax Credit is to make sure that Georgians are employed and have higher than average paying wages according to each respective county. In this case, wage refers to the annual wage paid to an employee, including bonuses, incentive pay, and deductions from gross pay. The annual wage also includes any employee contributions to 401(k) plans, medical, cafeteria plans, etc. The theory behind the Quality Jobs Tax Credit is to create an economic environment that attracts both corporations, great job opportunities and exceptional job talent to Georgia. Eventually, all of those factors lead to a healthier state economy.
How Do Businesses Qualify?
According to the Department of Community Affairs, businesses have to meet the following requirements:
- Create new quality jobs or relocate new quality jobs in a taxable year that begins on or after January 1, 2009.
- Create at least 50 new jobs within one year from the first date that the employer withholds wages for new quality jobs in Georgia.
- The jobs must have a regular work week of 30 hours or more.
- Employers pay at or above 110% of the county wage.
- An employer that initially claimed the credit in a taxable year beginning before January 1, 2012.
How Is The Quality Jobs Tax Credit Calculated?
Tax Credit Specialists determine the Quality Jobs Tax Credit through a series of formulas based on several factors. The calculations depend on the type of business, the amount of employees hired, and the average number of new quality jobs subject to Georgia income tax withholding for the taxable year. A business can earn anywhere from $2,500 to $5,000 per new quality job in tax credits.