Understanding taxation in Georgia is essential for businesses planning to set up operations or expand into the state. Georgia has a structured system that applies to corporations, S corporations, partnerships, LLCs, and LLPs, with its own unique mix of net worth taxes, income taxes, and penalties for non-compliance. The system is designed to ensure that businesses contribute fairly to the state economy while maintaining consistency with federal tax filing rules.
This blog outlines the main features of Georgia’s tax system, including the Net Worth Tax, corporate and partnership income tax requirements, estimated payments, and the interest and penalties that apply in cases of delay or underpayment.
Net Worth Tax
Corporations in Georgia are subject to a net worth tax, levied in exchange for the privilege of conducting business or exercising a corporate franchise in the state. The initial Net Worth Tax return is due on:
- The 15th day of the fourth month for C corporations
- The 15th day of the third month for S corporations after incorporation or qualification
This initial return covers the period beginning with the date of incorporation or qualification and ending with the close of the first income tax year. If this period is less than six months, only 50% of the tax is due.
A second return must then be filed, covering income tax for the first taxable year and the Net Worth Tax for the following full year. This return is also due on the 15th day of the fourth month (C corporations) or the third month (S corporations) following the close of the taxable year. Penalties for late filing or payment are 10% of the tax due.
Net worth for tax purposes includes issued capital stock, paid-in surplus, and retained earnings, with treasury stock excluded. Corporations with a net worth of USD 100,000 or less must still file a return (Form 600) but are exempt from paying the tax. The maximum tax payable is USD 5,000 for corporations with net worth exceeding USD 22 million.
The Net Worth Tax is structured on a sliding scale based on a corporation’s net worth:
- USD 100,000 or less – No tax
- Over USD 100,000 up to USD 150,000 – USD 125
- Over USD 150,000 up to USD 200,000 – USD 150
- Over USD 200,000 up to USD 300,000 – USD 200
- Over USD 300,000 up to USD 500,000 – USD 250
- Over USD 500,000 up to USD 750,000 – USD 300
- Over USD 750,000 up to USD 1,000,000 – USD 500
- Over USD 1,000,000 up to USD 2,000,000 – USD 750
- Over USD 2,000,000 up to USD 4,000,000 – USD 1,000
- Over USD 4,000,000 up to USD 6,000,000 – USD 1,250
- Over USD 6,000,000 up to USD 8,000,000 – USD 1,500
- Over USD 8,000,000 up to USD 10,000,000 – USD 1,750
- Over USD 10,000,000 up to USD 12,000,000 – USD 2,000
- Over USD 12,000,000 up to USD 14,000,000 – USD 2,500
- Over USD 14,000,000 up to USD 16,000,000 – USD 3,000
- Over USD 16,000,000 up to USD 18,000,000 – USD 3,500
- Over USD 18,000,000 up to USD 20,000,000 – USD 4,000
- Over USD 20,000,000 up to USD 22,000,000 – USD 4,500
- Over USD 22,000,000 – USD 5,000
This structure ensures that larger corporations contribute more, while smaller businesses with lower net worth face a lighter burden.
C – Corporation Income Tax
All corporations owning property, conducting business, or earning income from Georgia sources must file a Georgia corporate income tax return. The tax is imposed at a flat rate of 5.75% of Georgia taxable income.
The return, filed using Form 600, is due on the 15th day of the fourth month following the close of the taxable year. If this date falls on a weekend or holiday, the deadline moves to the next business day.
Corporations that receive an automatic six-month extension from the IRS for federal income tax filing are automatically granted the same extension in Georgia, provided they attach a copy of the federal extension to their state return. Georgia does not allow extensions beyond six months. If a taxpayer does not require a federal extension but still needs extra time for Georgia, they must file Form IT-303.
Estimated tax payments are required if a corporation expects to owe at least USD 25,000 in state income tax. These payments are due quarterly, on April 15, June 15, September 15, and December 15.
S – Corporation Income Tax
In Georgia, S corporations generally pass income through to individual shareholders, who pay taxes at the individual level. However, if an S corporation expects to owe at least USD 25,000 in state tax at the entity level, it must make estimated payments, also due quarterly in April, June, September, and December.
S corporations earning income or doing business in Georgia must file an S corporation income tax return using Form 600S. The filing deadline is the 15th day of the third month after the close of the taxable year. As with C corporations, extensions are aligned with the federal system, with a maximum of six months allowed.
The income of S corporations is also taxed at the flat rate of 5.75% on Georgia taxable income.
Partnership LLC & LLP Income Tax
Partnerships, LLCs, LLPs, joint ventures, syndicates, groups, pools, and other unincorporated organizations must file a Partnership Income Tax return (Form 700) if they conduct business, own property, have members domiciled in Georgia, or earn income from Georgia sources.
The return is due on the 15th day of the third month following the close of the taxable year. For entities that do not elect to pay tax at the entity level, Form 700 functions as an information return, and the tax is paid by the partners individually.
If the partnership elects to pay at the entity level, the business itself pays the tax rather than the partners. In such cases, estimated tax payments are required if the expected liability is USD 25,000 or more, with quarterly payments due on the same dates as for corporations.
Extensions for partnerships follow the same rules as C corporations, with a maximum of six months allowed.
Interest and Penalty
Georgia enforces compliance through a structured system of penalties and interest charges:
- Late Filing Penalty: 5% of the unpaid tax is charged for each month the return is late, up to a maximum of 25%.
- Late Payment Penalty: 0.5% of the unpaid tax is charged for each month, also capped at 25%.
- Interest: Accrues monthly from the original due date until payment is made. Since July 1, 2016, the annual rate has been set at the Federal Reserve prime rate plus 3%.
Importantly, the combined total of the late filing and late payment penalties cannot exceed 25% of the tax due.
Georgia’s taxation system balances fairness with accountability. By combining a Net Worth Tax with corporate and partnership income taxes, the state ensures that all businesses—from small LLCs to large corporations—contribute to its revenue base. The rules align closely with federal deadlines, making compliance easier, but the penalties for late filing or underpayment are steep enough to discourage negligence.
For businesses operating in Georgia, the key is planning ahead: tracking filing deadlines, making estimated payments on time, and keeping federal and state filings aligned. With proper attention, compliance can be straightforward, leaving businesses free to focus on growth and operations in the state.
