Retraining Tax Credits
Income Tax Credit
The Georgia Tax Credit for Retraining of Employees provides tax credits according to the "Georgia Business Expansion Support Act of 1994" as amended. The purpose of the retraining tax credit program is to offer an incentive to Georgia businesses to invest in new technology and retrain employees with the objective of the company remaining competitive in the rapidly changing world economy.
An eligible business enterprise may be granted tax credits against its Georgia state tax liability:
- Equal to one half of the direct cost of retraining
- Up to $500 per approved training program per year for each full-time employee who has successfully completed an approved retraining program
- Up to 50 percent of the amount of the taxpayer's income tax liability for the taxable year as computed without regard to this Code
Any tax credit claimed under this Code for any taxable year beginning on or after January 1, 1998, but not used for any such taxable year may be carried forward for ten years from the close of the taxable year in which the tax credit was granted. Credit can be claimed in the tax year that the retraining occurs. If cost for a retraining program spans more than one year, the costs are to be claimed in the year in which the retraining occurs.
Eligible Retraining Programs
Retraining programs that are eligible for the Retraining Tax Credit include:
- Retraining of current employees on newly installed equipment.
- Retraining of current employees on newly implemented technology, such as computer platforms, software implementation and upgrades, Total Quality Management, ISO 9000, and self-directed work teams.
Not eligible: Executive training, management development training, career development, personal enrichment training, etc.; cross-training of employees on equipment or technology that is not new to the company.
Eligible Retraining Costs
Certain direct costs are eligible for the Retraining Tax Credit. These costs include:
- Instructor salaries
- Employee wages during the retraining
- Development of retraining program
- Materials and supplies, textbooks and manuals
- Instructional media, such as videotapes, presentations, etc.
- Equipment used for retraining only (not production)
- Reasonable travel costs
Costs that are not eligible include sales taxes, training space, and employee-paid training. An employer may not receive a credit if the employer requires that the employee reimburse or pay the employer for the cost of retraining either directly or indirectly or through use of forfeiture of leave time, vacation time, or other compensable time. Itemized details regarding the direct retraining costs must be available upon audit.
To be eligible for the Retraining Tax Credit, employees must be:
- Georgia residents
- First-line employees or immediate supervisor
- Continuously employed with the company for a minimum of 16 weeks
- Full-time employees (employed for a minimum of 25 hours per week)
Employees that are not eligible for the Retraining Tax Credit include executives, management, partners, etc. (above first-line supervisors.)
For more information contact: