Georgia Tax Formula Advantage


In 2005, Georgia became the first state in the Southeast to adopt a “Single Factor Gross Receipts” apportionment formula. As indicated by its name, the “Single Factor Gross Receipts'” formula will treat a company’s Gross Receipts, or sales factor, as the only relevant factor in determining the portion of that company’s income that is subject to Georgia income tax.

Previously, Georgia used a three-factor apportionment formula, but for the 2008 tax year and thereafter, Georgia property and payroll will not factor into the calculation of a company’s corporate income tax. This new single sales factor apportionment formula significantly reduces the effective rate of Georgia income taxation of Georgia-based manufacturing, distribution and service companies with substantial sales to customers outside Georgia.

Example: Assume that, for the 2017 tax year, In-State Manufacturing Co., Inc. has the following total overall taxable income and gross receipt sales in Georgia as compared to total gross receipt sales:

Taxable Income: $10 million
Percent of Gross Receipts in Georgia: 13%.

Accordingly, in 2017, only $1.3 million of In-State Manufacturing Co., Inc.’s income would be subject to Georgia’s 5.75% corporate income tax under the new Single Factor Gross Receipts formula. [($10 million x 13%) x 5.75%] = $74,750 corporate income tax liability. In addition, Georgia does not use the so-called “Throw Back Rule,” under which many states tax income from sales of goods or services to out of state customers.


The annual tax based on net worth (capital stock + retained earnings) is called a license or occupational tax in Georgia. Most states refer to the tax on net worth either as a franchise or privilege tax. Domestic corporations are taxed on 100 percent of net worth. Foreign (out-of-state) corporations are taxed only on net worth apportioned to Georgia. This tax is capped in Georgia at a maximum amount of $5,000 annually.