Georgia Tax Law Update – Spring 2022

It’s been a busy 2022 legislative session for Georgia lawmakers, particularly with respect to tax laws. Below, we highlight some of those changes impacting businesses and individuals.

Corporate Income Tax Developments

Elective Georgia Consolidated Corporate Income Tax Returns (H.B. 1058)

Currently, Georgia allows corporate taxpayers the opportunity to apply for consolidated income tax return status. It was also possible for the state to require a taxpayer to file consolidated.

Beginning for tax years beginning on or after January 1, 2023, Georgia will allow qualifying taxpayers the ability to elect consolidated income tax filing status without the pre-approval process, and the Department of Revenue can no longer require consolidated filing. It is a five-year election, which terminates automatically at the end of the five years.

The new law does not change the requirement that each member of the Georgia consolidated group must be a member of the same affiliated federal group and all members must be subject to income tax in Georgia.

Taxpayers with previous permission to file Georgia income tax on a consolidated basis can choose to continue under its existing agreement or terminate and re-elect consolidated under the new law.

Updated Internal Revenue Code Conformity (H.B. 1320)

Applicable to all tax years beginning on or after January 1, 2021, Georgia’s adoption of the Internal Revenue Code is current through 2021 changes, except as specifically noted.

Georgia Tax Credits (multiple bills)

Several Georgia income tax credits have been enacted or revised and others extended, including:

• Qualified Donations of Real Property (sunset extended to 2026, new cap on tax credits);
• Contributions to Foster Child Support Organizations (new credit in 2023);
• Historic Property Rehabilitation (sunset extended to 2027, revised caps);
• Education Tax Credits (now includes insurance companies, increased caps for individuals);
• Contributions to Law Enforcement Foundations (new credit in 2023); and
• Contributions to Rural Hospital Organizations (increased cap).

Sales and Use Tax

A few sales and use tax exemptions to note:

High-tech company sales and use tax exemption on sale or lease of computer equipment as it currently exists has been extended by six months to the end of 2023. Exclusions have been added to the law expected to be effective January 1, 2024.

Admission exemptions have been extended to 2027 for certain fine arts performance and exhibits in Georgia. There is also an extension of the sunset of the exemption for admissions to any FIFA World Cup match in Georgia as part of the major sporting events admission exemption.

Individual Income Tax Developments

The current cost of everyday life is increasing, but Georgia residents are benefitting via some tax relief.

Government Surplus Income Tax Refunds (H.B. 1302)

On March 23, 2022, Governor Brian Kemp signed into law a bill that will provide income tax refunds to Georgia residents and qualifying non-residents/part-year residents who timely filed state income tax returns for tax years 2020 and 2021. More than $1 billion of surplus government funds will fund those payments.

Taxpayers whose 2020 filing status was single or married filing separately could receive up to $250. Taxpayers filing head of household for 2020 have a maximum refund of $375, and married filing jointly up to a $500 refund.

Proportional refunds may be eligible for non-resident/part-year resident filers who filed for both years. The Department of Revenue has communicated that refunds will be distributed between May and August for returns filed by April 18, 2022.

The refunds do not constitute taxable income for Georgia purposes.

The state has published a list of FAQs on its website.

Gasoline and Diesel Tax Suspension (H.B. 304)

Governor Kemp also signed legislation on March 18, 2022 to temporarily suspend Georgia’s excise tax on motor fuel sales—almost 30 cents a gallon tax on gasoline and almost 33 cents a gallon on diesel. This benefit is scheduled to end May 31.

Tax Reduction and Reform Act of 2022 (H.B. 1437)

On April 26, 2022, Governor Kemp signed legislation to reduce the Georgia individual income tax, which is currently 5.75%, to 4.99%.

This reduction will take place over a seven-year period beginning in 2024. This is coupled with a few other changes, like repealing the standard and additional deductions and a mandatory add back of taxes deducted for federal tax purposes over a threshold.

Pass-Through Entity Tax Election

The Georgia pass-through entity tax was passed by the legislature in 2021, but it did not become effective until tax year 2022. Estimated payments are required for those planning to make the election.

Contact your Warren Averett tax advisor for an evaluation of your tax situation to see if the election will be beneficial. Stay tuned for additional guidance as the mechanics of the election and computation of the tax gets closer to implementation.

Learn More and Connect with an Advisor

If you are interested in more information on these topics, or if you’d like to know more about how they impact your organization, please contact your Warren Averett tax advisor.