Taxes
Georgia taxes include corporate, sales, property and personal income taxes.
Corporate Taxes
All companies operating in the U.S. are required to pay federal income taxes on a graduated scale. The effective federal tax rate varies from 15 to 35 percent. The state corporate income tax rate is 6 percent, unchanged since 1969. Businesses pay taxes only on income earned in Georgia, and thus the effective state tax rate is usually less than 6 percent.
In 2005, Georgia became the first state in the Southeast to adopt a “Single Factor Gross Receipts” apportionment formula, which will substantially reduce Georgia state corporate income tax for companies based in the state that deliver a large portion of products or services to customers outside of Georgia.
Sales Tax
A 4 percent sales tax is paid on goods purchased in Georgia to be used in the conduct of business (not for resale). Local communities may impose a local sales tax of 1 to 3 percent. Purchases of production machinery, environmental equipment, materials-handling equipment, raw materials and real estate are exempt from sales tax.
Property Tax
A property tax is assessed by local communities on the value of real estate and fixed assets. The local property tax rate varies from community to community. The median effective property tax rate is about 1 percent of fair-market value.
Personal Income Tax
U.S. residents and qualifying non-residents must pay federal personal income tax. Most states also have a personal income tax. Georgia’s top personal income tax rate is a moderate 6 percent of income earned in Georgia, with lower effective tax rates for those with low incomes. State personal tax is based on the amount of federal taxable income. Because Georgia personal income taxes are deductible from this amount, the effective rate of personal income tax is 5.67 percent.
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