The R&D Tax Credit Opportunities in Georgia



By , , and


In 2014, Georgia was named the nation's most competitive state for business by Site Selection, the leading corporate magazine covering real estate strategy and economic development. This top rank is achieved after an official evaluation of the state's economic activity and growth. For the last 4 years Georgia has remained in the top 10 of this list before climbing to the top spot this year.


The Research & Development Tax Credit

Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of uncertainty
  • Process of experimentation

Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On January 2, 2013, President Obama signed the bill extending the R&D Tax Credit for 2012 and 2013 tax years. A similar extension is expected for 2014.


Georgia R&D Tax Credit

Research and Development (R&D) tax credits are a valuable benefit for companies developing new products and services in Georgia. R&D tax credits are available to any company that increases its qualified research spending. Brand new companies, existing companies embarking on R&D for the first time and established companies expanding their R&D budget all are eligible for R&D tax credits.

The tax credit earned is a portion of the increase in R&D spending. The credit can be used to offset up to 50 percent of net Georgia income tax liability, after all other credits have been applied. Any unused R&D tax credits can be carried forward for up to 10 years. In addition, excess R&D tax credits can be used against state payroll withholding.


IT and Manufacturing

Georgia has more than 14,900 tech companies state-wide making it the 5th largest IT employment cluster in the United States. AT&T built a foundry in Atlanta to test and develop new products and networks. Like many of the other companies that come to Georgia to do business, they realize the resources that Georgia has to offer.

Polymer Aging Concepts is a Georgia based company that designs and creates sensors which attach to polymer components of anything and everything, particularly those used in commercial and energy manufacturing. These sensors alert the company when polymer components are becoming deficient and are no longer capable of performing their task efficiently. The new sensors will help save time and money by reducing manufacturing shutdown time which is spent looking for and then fixing the problem.


Energy

Clean renewable energy is the way of the future and becoming ever more so the way of the present. Georgia is leading the way in the charge towards solar energy exploration with the help of a company called SolarMax. SolarMax produces and designs some of the best solar energy inverters in the world. Originally a Swiss company, SolarMax decided to move to Georgia for its Center of Innovation, access to Georgia Tech's resources, the Savannah Port, and the Atlanta Airport. Applying Swiss quality to their innovations, SolarMax continually produces a reliable and efficient product that is built to last. To ensure the safety of consumers, SolarMax introduced Arc Fault Protection and Interruption which is designed for certain products where voltages can reach 1,000 + volts. Arc Fault Protection and Interruption is used so that Direct Current (Arc Fault) flashes do not occur and risk causing fire or serious harm to the user when checking the inverter. As soon as an Arc Fault is detected by the inverter all power supply is cut, ensuring the safety of the users and their homes or business. This technology is critical since some novice solar installers use home grade electrical connectors for commercial installations that produce a lot of electrical current. Without the technology, this formula often results in a catastrophic electrical meltdown.


Infrastructure

Logistically, Georgia has the largest rail system in the Southeast, the tenth largest air cargo hub in the North America, the largest single container cargo terminal in North America, the fourth largest cargo port in North America, the busiest passenger airport in America, and finally, an elaborate road system that consists of 1,244 miles of interstate highway.

The Home Depot has been working with Georgia's economic development department in order to grow and create a more efficient supply chain. As The Home Depot's home state, it is important that both the business and the state work together to allow for the most efficient economic growth. Working with the Port of Savannah, The Home Depot strives to keep up with its $11 billion nationwide store inventory, which often has to be restocked after hurricanes or other weather related events.


Aerospace

Georgia has been rapidly expanding in the areas of aerospace, agribusiness, energy, IT, logistics, and manufacturing. Aerospace innovation in Georgia has been one of the more rapidly growing industries. A large convention was held on July 29, 2014 to discuss the exploration of aerospace development in the state. Generation Orbit Launch Services, Inc. received a phase 1 contract from the Air Force Research Laboratory to develop a single-stage air launched liquid rocket vehicle for the purpose of gathering data during a hyper sonic flight.

Georgia has begun to fund and develop the use of Unmanned Aerial Vehicle (UAV) technology to aid in the state's agricultural industry. This technology uses radio controlled helicopters equipped with high definition cameras to survey crop fields in order to make more educated decisions about how much chemicals to use in the fields and where. Eric Johnson is the head of Georgia tech's UAV Research Facility as well as the leader of a team of universities that are working together to achieve the designation as an FAA Center of Excellence for Unmanned Aircraft Systems. Achieving that designation would give the group funding for a decade.


University Research in Georgia


Georgia Institute of Technology

Georgia Tech is one of the most prestigious engineering and research facilities in the World. With 20,000 students based in a city campus with close proximity to the city of Atlanta, many companies are eager to tap into the knowledge and research that Georgia Tech holds.

The Georgia Department of Transportation granted Georgia Tech a $75,000 study to explore drone usage on the highways in order to count cars or assist with accident investigations. Georgia State Representative Harry Geisinger said that "within the next 3 to 5 years, everyone is going to want oneā€¦" . The FAA reports that by 2018 there will be 7,500 commercial drones operating and by 2030 as many as 30,000 drones will be in use.

University of Georgia
As the oldest university in the state, The University of Georgia brings a multitude of opportunities to the table. Recently, it has partnered up with CMS Technology to focus on secondary processing in the poultry industry . Increasingly, Americans are eating more and more chicken instead of beef. As a result the chicken producers need to ramp up production. As a leader in poultry processing research, the University of Georgia is a great partner for a company like CMS Technology who specializes in producing chemicals used in food process cleaning equipment.

Emory University
Emory University is a globally recognized university for its research in medicine. Its medical center is a leading hospital with highly trained staff that are equipped with the most state- of- the-art medical technology. Emory Healthcare has been named by the National Association for Business Resources for the 2nd year in a row as one of the best employers to work for in the Atlanta area. Criteria for evaluation include; benefits, employee engagement and retention, employee education and development, communication and shared vision, diversity and inclusion, and work-life balance.

Emory and Georgia Tech Alone spend a combined $1.25 Billion on research annually. Emory recently obtained $507.1 million & $333.8 million in federal funding and another $173.3 million in non-federal funding. Much of that money went directly to the school of medicine to help fund medical research . This research supports projects such as the most recent challenge of treating two American Ebola victims that contracted the virus in West Africa during a medical mission.



Conclusion

Georgia has continually proven themselves a leader in all aspects of business, agriculture, IT, infrastructure, university research, and energy. As a state that is leading the way in economic growth and constantly breaking down innovative barriers Georgia is an ideal state for innovators looking to expand new ideas and technology. Federal and state tax credits are available to stimulate the efforts.

Article Citation List