The 2023-2024 Georgia legislative session ended on March 28 and produced several bills with notable tax impacts including tax rate changes, modifications to state credit programs and the potential for a new Georgia Tax Court that has been signed by the Governor.
Income Tax Rate Changes
Signed into law on April 18, 2024, Georgia HB 1015 reduces the individual income tax rate for tax years beginning on or after January 1, 2024, from 5.49% to 5.39%. Corporations and pass-through entities electing into the entity level tax would also be subject to the new 5.39% rate, as HB 1023 (also signed by the Governor on April 18) matches the corporate and PTE tax rate to the individual income tax rate in effect for the same tax year. The bill also extends the corporate tax filing date to one month beyond the IRS filing deadline (to May 15 for calendar year taxpayers), though the due date for tax would remain April 15.
It is important to note that, while applicable to tax years beginning on or after January 1, 2024, the effective date of HB 1015 and HB 1023 is July 1, 2024. Taxpayers making estimated payments due before this date should technically use the existing tax rate in their computations and true up estimated payments for the rate change in the installments due after the July 1 effective date.
HB 1015 retains the previously enacted rate reductions under HB 1437 (Ga. Laws 2022). If revenue targets are met, additional annual reductions of 0.10% will apply starting January 1, 2025, until the tax rate reaches 4.99%. The reductions will be delayed by one year for each year that revenue requirements are not met.
Dependent Exemption Increased
HB 1021, signed by Governor Kemp on April 18, 2024, increases the state’s income tax dependent exemption to $4,000 per dependent for tax years beginning on or after January 1, 2024.
IRC Conformity Update
HB 1162, signed by Governor Kemp on April 22, 2024, updates the state’s date of conformity to the Internal Revenue Code (IRC) to January 1, 2024 (from January 1, 2023), applicable to tax years beginning on or after January 1, 2023.
Corporate Income Tax Filing Extension
For tax years beginning on or after January 1, 2025, HB 1023 grants corporate taxpayers an additional 30 days after the federal extension deadline to file their state corporate income tax return.
Tax Credit Changes
On May 6, 2024, Governor Kemp signed Georgia HB 1181, which makes substantial changes to the carryforward period for several income tax credit programs. Among other changes, the bill reduces the carryforward period for the Qualified Education Expense Credit and the Film Tax Credit from 5 years to 3 years. Additionally, the bill reduces the carryforward for the state Jobs Tax Credit, R&D Tax Credit, Port Tax Credit and the Employee Retraining Credit programs from 10 years to 5 years. The legislation applies to credits generated in tax years beginning on or after January 1, 2025; the changes do not apply to existing carryforwards for credits generated in tax years beginning before this date.
The bill was one of two pieces of legislation introduced by House Republicans aimed largely at reforming the state’s Film Tax Credit program. The accompanying bill, HB 1180, would have raised the required minimum production investment for the Film Tax Credit, implemented a nine-part test to determine qualification for the credit, and limited the total dollar value of credit transfers allowed during a single year. Though the Senate chose not to act on HB 1180 this legislative session, analysts expect that another pass at limiting benefits associated with the state’s Film Tax Credit program is expected to be on the table in future sessions.
Voters to Approve Potential State Tax Court
Georgia voters will have the chance to approve an amendment to the state constitution to create the Georgia Tax Court, which would replace the existing Georgia Tax Tribunal. While the Tax Tribunal is an administrative panel under the executive branch of state government, the proposed Georgia Tax Court would be a judicial branch court with broader jurisdiction over constitutional issues and certain statutory interpretations as well as appeal rights directly to the Georgia Court of Appeals. If the constitutional amendment is passed by voters in November, HB 1267 provides the statutory framework for the new Tax Court, which would begin receiving cases in 2026.
Sales Tax Data Center Exemption
Georgia currently offers a sales and use tax exemption for high-technology data center equipment sales associated with data centers that meet minimum investment thresholds and maintain a center number of new jobs during the investment period. The Georgia legislature passed HB 1192 during the 2024 session, which contained provisions to pause the Data Center Exemption for the period beginning July 1, 2024, through June 30, 2026. The bill was vetoed by Governor Kemp on May 6, 2024, preserving the current data center exemption rules until the next legislative session in 2025.
Property Tax Changes
The most recent legislative session produced several bills with an impact on property tax, including HB 808 (signed into law on May 6, 2024) which increases the ad valorem tax exemption for personal property tax in a country from $7,500 to $20,000. Additionally, HB 581 was signed into law on April 18, 2024, and places limitations on increases in assessed values of homesteads.
If you have any questions, please reach out to a member of the Frazier & Deeter State & Local Tax (SALT) team for assistance.
Brian Strahle, Partner and National SALT Practice Leader, Brian.Strahle@frazierdeeter.com
Anna Cronic, SALT Senior Manager, Anna.Cronic@frazierdeeter.com
John Yoak, SALT Senior Manager, John.Yoak@frazierdeeter.com