Tax Incentives “Above the Line”

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a critical measure of cash flow for many companies. Basically it is revenue less operating expenses.  Expenses considered “above the line” typically include operating, general and administrative, and selling expenses. They also include many taxes such as payroll withholding taxsales and use taxreal and personal property tax, government business license fees, and other local taxes. Note that income tax is not part of the EBITDA calculation and is not an “above the line” expense.
There are many state and local government taxes that may impact these expenses. You can help your clients increase their EBITDA by reviewing tax incentives and savings in the following areas:
  • Tax credits & withholding taxes – Instead of using tax credits against income taxes, some tax credits can be utilized against Georgia payroll withholding taxes. This includes the R&D credit, clean energy and some of the job tax credits (click here for details).
  • Real and personal property tax – Review accumulated depreciation schedules and business personal property tax returns for items no longer owned by the company. Also review for potential business inventory and freeport exemptions (click here for details).
  • Sales and use tax – Are all of the sales tax exemption certificates on file?  What about sales tax exemptions for energy used in manufacturing? (click here for details).
  • Georgia Enterprise Zone – Is the company moving to or expanding in a designed Georgia Enterprise Zone? This incentive may include local property tax exemptions and reductions in occupation taxes, regulatory fees, or local fees (click here for details).

So get started helping your clients find their “above the line” tax incentives — they will thank you for helping them save money AND increase EBITDA!