Georgia is well known for the big tax credit it gives filmmakers who spend over $500,000 in the state. But chances are, you’re probably not employing people to create TV shows and movies in the state.
Those of us who aren’t making cinematic art in Georgia are subject to the state’s various income, sales, and corporate taxes.
In this guide, you’ll learn how the Peach State’s taxes affect the way you process payroll.
Georgia Payroll Taxes Overview
Let’s take a look at the payroll taxes and laws you need to pay attention to if you’re a payroll manager in Georgia:
- State Income Tax: Georgia imposes six different income tax brackets based on taxable income and filing status. They range from 1% to 5.75%. That said, most people are in the 5.75% bracket—more on that in a moment—and the state is moving to a flat tax rate of 5.49 in 2024.
- Corporate Income Tax: The Peach State levies a corporate income tax of 5.75%. It applies only to C and S corporations, not other types of businesses.
- Corporate Net Worth Tax: Along with the corporate income tax, C and S corporations must file net worth tax returns and may need to pay taxes. The maximum taxable net worth is $22 million with a tax of $5,000. If you’re new to the state, you must file your first net worth return by the 15th day of the 3rd calendar month after you incorporate in Georgia. Learn more about Georgia’s Corporate Net Worth Tax.
- Local Taxes: Along with a state sales tax rate of 4%, Georgia allows a maximum local sales tax rate of 5%. Many Georgia cities take advantage of these tax rates. Atlanta has a combined 8.9% sales tax rate, for example. Savannah has a 7% combined sales tax rate.
- Minimum Wage: At $5.15 an hour, Georgia’s minimum wage is lower than the federal minimum wage. Because of this, any employee covered by the Fair Labor Standards Act (FLSA) must be paid at least $7.25—the federal minimum wage.
- State Unemployment Tax: Georgia employers pay unemployment taxes to fund the Peach State’s unemployment insurance fund. New employers—or those who are hiring employees for the first time—pay a rate of 2.7%. Over time, the rate can change depending on the company’s unemployment payment and payout history. The taxable wage base is the first $9,500 for each employee.
- Workers Compensation: If you have three or more employees, you must carry worker’s compensation in Georgia. This includes part-time employees and, for LLCs and corporations, any members or officers that are part of the company.
Georgia doesn’t require its employees to offer meal breaks or PTO. The state does offer up to three weeks of paid parental leave, but only to state employees.
Here’s the deal: if you employ workers in Georgia, make sure you provide some of the benefits that the state doesn’t offer. Paid time off is essential. So is a livable wage.
Do keep in mind that the payroll rules we’ve covered here only count for state taxes. You’ll still need to follow all the federal payroll tax guidelines, too.
Registering for Georgia Payroll
Registering your business is easy in Georgia. All you have to do is head to the Georgia Tax Center (GTC), an online self-service portal. Keep in mind that anyone who does business in Georgia must register through this portal, including those big production companies that film in the Peach State.
To register your business, you’ll need a few important pieces of information
- Your registered business name
- The physical location of your business
- The business’s mailing address
- Your Social Security Number (SSN), if you’re a sole proprietor, OR;
- Your Federal Employer Identification Number (FEIN) if you’re a corporation, LLC, or partnership
Once you register your account, you’ll receive an email with your unique tax account number within about 15 minutes.
Make sure to keep it somewhere safe and secure. You’ll use your GTC portal and tax account number to pay and manage things like payroll and sales tax.
You must file two things quarterly. First, your taxes, along with tax payments due. Second, your wage reports for the preceding quarter.
These are all due on or before:
- April 30
- July 31
- October 31
- January 31
The only exception here is for Domestic Employers—in other words, people who employ workers for in-home services. Domestic Employers only need to file an Annual Wage and Tax report, and it’s due January 31, along with any payment owed to the state.
The state names its GTC portal as the preferred place to pay and file everything.
Calculating Georgia Payroll Tax
Remember how we mentioned that Georgia’s payroll tax has several different brackets but most people pay at the highest rate?
All it takes is one glance at the brackets to see why. Here’s what it looks like for single filers:
- Taxable Income: $0-$750 → Taxes Owed: 1%
- Taxable Income: $751-$2,250 → Taxes Owed: $8 plus 2% of the amount over $750
- Taxable Income: $2,251-$3,750 → Taxes Owed: $38 plus 3% of the amount over $2,250
- Taxable Income: $3,751-$5,250 → Taxes Owed: $83 plus 4% of the amount over $3,750
- Taxable Income: $5,251-$7,000 → Taxes Owed: $143 plus 5% of the amount over $5,250
- Taxable Income: $7,001 or more → Taxes Owed: $230 plus 5.75% of the amount over $7,000
Talk about complicated! Yet it’s easy to see why most people pay the 5.75% rate, since most Georgia employees (hopefully) make more than $7,000 in taxable income a year.
The good news is that Georgia is getting rid of this graduated rate system after 2023. Starting in 2024, the state will have a flat income tax rate of 5.49%.
To help you know how much to withhold, you’ll furnish a Form G-4 Employee Withholding to each of your employees. They must fill this form out and return it to you. The information they provide will tell you how much to hold back for those quarterly GTC payments.
As for the state’s corporate income tax, the amount corporations pay is “based on a corporation’s federal taxable net income [as] modified by Georgia statutory adjustments.” This is according to the Georgia Department of Revenue.
When you register your corporation in Georgia, you’ll get more information about how much to pay in corporate income tax.
The same goes for the state’s net worth tax.
To manage everything related to unemployment insurance, apply for a tax account with the Georgia Department of Labor (GDOL). Do this immediately after you pay out your first payroll for work completed in Georgia. You’ll report and pay everything related to unemployment tax through the GDOL.
As a new employer or employer hiring employees for the first time, your tax rate will be 2.7%. But that could change over time, depending on the GDOL’s assessment of your business.
Whatever you do, make sure you apply for a GDOL tax account and pay your unemployment taxes on time.
If any of your reports are late, you’ll pay either $20 or .05 (whichever is bigger) of the gross payroll for each month of delinquency. If you don’t pay those fees, your fees will accrue at an interest rate of 1.5% a month. You might also face a collections fee of 20% of the amounts owed.
Georgia Paycheck Laws
There are no specific payroll frequency laws in Georgia. That said, it’s important to establish regular paydays and stick to them. Employees want to know when they’re going to get paid.
Georgia also lacks pay stub laws. But you absolutely should provide pay stubs to your employees, a task made easy with high-quality payroll software. That’s because—despite not having pay stub requirements—Georgia does have an employee records law.
It basically states that employers must keep records of each employee’s:
- Name
- Address
- Occupation
- Daily and weekly hours
- Daily wages
All records must be kept for at least one year after the date the record was made.
You might as well make this easier by handing out pay stubs each payday and keeping a copy of each stub in your records.
Another employee-unfriendly legal issue in Georgia is that there are no paycheck deduction laws. Except for one: you can’t deduct any unemployment insurance tax payments from your employee’s paychecks.
But please don’t deduct things under your employees’ noses just because you can. Instead, create a policy that clearly explains what does and doesn’t get deducted from paychecks—and stick to it.
Georgia also lacks a final paycheck law. So for employees covered under the Federal FLSA laws, you have until the next regularly scheduled payday to hand out that final paycheck.
New Hire Reporting for Georgia Payroll
Under state and federal law, all Georgia employers must report new hires or rehires to the state’s online New Hire Reporting Center. This is true whether employees are full-time, part-time, or seasonal.
Thankfully, the online portal makes it easy to do this. Just make sure you report all new hires and rehires within 10 days of the hire date.
You’ll need to provide your FEIN, business name, and business address, along with the employee’s:
- First, middle, and last name(s)
- Mailing address
- SSN
- Date of hire
- State of hire, if you’re reporting them as a multi-state employee
If you really don’t want to use the online portal to report new hires, you can send the paperwork to…New Jersey. No, really. That’s the state where Georgia’s New Hire Reporting Center accepts mail.
For more tips on reporting new hires, look no further than the reporting fundamentals page on Georgia’s New Hire Reporting Center website.
