C Corp vs S Corp in Georgia

Automatic federal S election recognition

Georgia recognizes the federal S election under O.C.G.A. Section 48-7-21(b)(7) without requiring a separate state election form. A federal S corp doing business in Georgia files Form 600S, allocates net income to Georgia by apportionment, and the income flows through to shareholders for Georgia personal income tax at the flat 5.39 percent rate (2026).

Non-resident shareholders may have Georgia withholding requirements on their share of Georgia-source S corp income, addressed via Form G-7 or composite return Form IT-CR.

Source: Georgia Department of Revenue

The Georgia net worth tax

Georgia imposes a net worth tax on corporations (both C and S) doing business in the state. The tax is graduated from $10 (for net worth up to $10,000) to $5,000 (for net worth over $22 million). For most operating businesses, the net worth tax is between $50 and $750 annually.

LLCs are generally exempt from the Georgia net worth tax. An LLC taxed as an S corp (via Form 2553) thus avoids the net worth tax while still benefiting from the S corp federal pass-through treatment. This makes "LLC with S election" structurally cheaper in Georgia than "corporation with S election."

Source: O.C.G.A. Section 48-13-72.

The Georgia rate reduction schedule

Georgia's flat 5.49 percent rate (effective 2024) is on a scheduled glide path: 5.39 percent for tax year 2024, decreasing by 0.10 percentage points each year contingent on revenue targets, with a target of 4.99 percent. Both individual and corporate rates fall in lockstep. Verify the current rate at the Georgia DOR before filing.

Lower future rates compress the difference between S and C corp tax. For a Georgia C corp distributing earnings to a Georgia shareholder, the combined Georgia tax may fall to around 9 percent on distributed earnings (5.39 percent entity + 5.39 percent dividend at personal level, minus partial dividend exclusions where applicable).