During the 2022 legislative session, the Georgia General Assembly passed significant tax legislation, including authorizing affiliated groups to file consolidated corporate income tax returns without prior approval from the Department of Revenue, extending and amending qualification for the high-technology and data center sales tax exemptions, extending and increasing several income tax credits, and changing procedures for appealing some tax cases to superior court. 

Monday, April 1, 2022, was “Sine Die” or the 40th and final legislative day of the 2022 legislative session. Before the last day of the session, Governor Kemp signed two tax bills into law—one providing a one-time tax refund for taxpayers who filed income tax returns for both the 2020 and 2021 tax years of $250 to $500, and a bill eliminating the motor fuel tax until May 31, 2022. See additional coverage here.

The bills below were passed by both chambers of the General Assembly and are transmitted to the Governor, who can sign or veto the legislation within 40 days after the end of the legislative session. If the Governor fails to take any action, the legislation will become law upon the expiration of the 40-day period (May 14).

Sales tax 

HB 1291 – High-Technology Exemption and Data Center Sales Tax Exemption. This bill extends the sunset of the exemption for purchases of qualified computer equipment within O.C.G.A. § 48-8-3(68) for a high-technology company from June 30, 2023 to December 31, 2028. However, beginning in 2024, qualifying purchases (required to meet the $15 million threshold) will include only taxable purchases and leases, specifically excluding prewritten computer software (electronically delivered or otherwise) as a qualifying purchase. Additionally, starting in 2024, the exemption would not apply to 10% of the first $15 million of qualifying purchases, with a full exemption on qualified purchases beyond that threshold.

HB 1291 also extends the sunset of the Data Center exemption in O.C.G.A. § 48-8-3(68.1) from 2028 to 2033 and modifies the job creation and investment requirements as follows: (i) increases the job creation requirement from 20 to 25 quality jobs in counties with populations greater than 50,000; (ii) decreases the job creation requirement from 20 to 10 quality jobs and decreases the minimum investment from $150 million to $75 million in counties with population between 30,000 and 50,000; and (iii) decreases the job creation requirement from 20 to 5 quality jobs and decreases the minimum investment from $100 million to $25 million in counties with a population of less than 30,000.

HB 586 – Georgia Economic Recovery Act. This bill extends the sales tax exemption for sales of tickets, fees, or charges for admission to certain fine arts performances or exhibitions from December 31, 2022, to December 31, 2027. This bill also extends the period for which the Department of Natural Resources can accept new applications for conservation easement tax credits from December 31, 2021, to December 31, 2026, but decreases the aggregate amount of conservation tax credits allowed per year from $30 million to $4 million beginning June 1, 2022.

HB 1034 – Sales Tax Exemption for Nonrecurring Major Sporting Events. This bill extends the existing sales tax exemption for nonrecurring major sporting events expected to generate over $50 million in the host locality (such as a Super Bowl, professional sports all-star game, or semifinal game or championship game of a national collegiate tournament) through 2031. The bill also adds “any match of a FIFA World Cup” to the definition of exempt “major sporting events.”

Income tax

HB 1058 – Consolidated Reporting Election. This bill authorizes affiliated groups that file a federal consolidated return to make a 5-year election to file consolidated corporate income tax returns in Georgia. Under current law, taxpayers that file a federal consolidated return and that desire to file a consolidated Georgia return must request advance permission from the Department of Revenue to do so. The Department often prescribes conditions for the consolidated filing through this permission process. The legislation makes no changes to the post-apportionment nexus consolidated filing methodology or any ability of the Department to audit consolidated returns.

HB 1320 – Annual IRC Conformity. This is Georgia’s annual income tax conformity bill, which will conform Georgia’s revenue code to the federal Internal Revenue Code as of January 1, 2022. The bill also clarifies that the Department’s authority relating to emergency relief is based on federally (rather than presidentially) declared disasters, as defined in the Internal Revenue Code. This bill should be read in conjunction with HB 7EX, which was passed during a special session by both chambers and signed by the Governor on December 8, 2021. HB 1320 was passed by both chambers in March, but still awaits the Governor’s signature.

HB 1437 – Tax Reduction and Reform Act of 2022. This bill phases in a reduced personal income tax rate from 5.75% down to 4.99% by the 2029 tax year. The phase in would begin with a reduction to 5.49% beginning in 2024. The phased-in reduction is based on the state meeting certain economic thresholds including future revenue estimate and prior year tax collections. The rate reductions do not apply to corporate tax rates.

The bill eliminates the progressive marginal tax rates and combines the personal exemption and standard deduction into a single, larger personal exemption, although itemized deductions would be retained for those that itemize for federal purposes. For itemized filers, the bill makes permanent the federal SALT cap by limiting the SALT deduction (including Georgia taxes) to $10,000 (except for married filing separately which is $5,000) of amounts deducted pursuant to IRC § 164.

Additionally, the bill requests the House Ways and Means and Senate Finance Committees to jointly “undertake a review of any and all state tax credits, deductions, and exemptions,” and submit its finding no later than December 1, 2023.

New and revised income tax credits:

HB 469 – Historic Structure Rehabilitation Tax Credit. This bill modifies the Historic Rehabilitation Tax Credit by applying caps to historic homes and certified structures. It also extends the sunset date for such credits through December 31, 2027 (or 2025 for historic homes).

HB 517 – Student Scholarship Organization Credit. This bill increases the individual and aggregate (from $100 million to $120 million) tax credit for donating money to nonprofit student scholarship organizations that allow students to attend private school beginning in 2023. Additionally, it permits insurance companies to utilize the credit against insurance premium tax up to an aggregate amount of $6 million for any year. The bill also adds additional reporting and auditing requirements for the Student Scholarship Organizations.

HB 1041– Rural Hospital Credit. This bill increases the aggregate limit for state tax credits for contributions to rural hospital organizations from $60 million to $75 million beginning in 2023.

HB 1053 – Postproduction and Film Tax Credit. The bill extends the sunset of the postproduction tax credit from January 1, 2023 to December 31, 2025. The bill also requires that entities that claim the film tax credit and the post-production tax credit consent to taxation in Georgia on the income from those projects. Furthermore, the bill taxes nonresidents on future residual payments from work performed in Georgia with respect to a state certified production regardless of where such residuals are earned.  The bill also reduces the carryforward of the postproduction tax credit from 5 years to 3 years.

SB 361 – Law Enforcement Donation Credits. This law provides a new income tax credit for individuals, LLC members, partnership partners and S corporation shareholders ranging from $5,000-$10,000 for donations to “law enforcement foundations,” defined as domestic nonprofit corporations with the sole function of supporting local law enforcement units. The credit is capped for all taxpayers at $75 million per year.

Other

HB 916- Appeals to Superior Court procedural changes. This new law provides for a unified procedure for appealing decisions of a lower body—such as the Georgia Tax Tribunal or another administrative court—to the Superior or State courts. All such appeals will be “petitions for review” and subject to the same procedural requirements. In addition, the law affects local property tax appeals to superior courts. Under the new law, superior courts would be required to hear property tax appeals within 120 days. The law will only apply to cases filed in superior court after July 1, 2023.

HB 997 – Property Tax Exemption for Timber Producers. This bill provides for a constitutional referendum this November to provide for a state-wide exemption from all ad valorem taxes for certain equipment used by timber producers to produce or harvest timber.

HB 1044 – Regional Development Authorities. This bill allows counties and local government authorities to form regional development authorities, where it may not be feasible for a county or local government authorities to have their own development authority. Such development authorities are often the vehicles for private investment projects and property tax abatements. The bill also amends the definitions of “video service” and “cable service,” respectively, to prevent local jurisdictions from charging franchise fees on gross revenues from streaming video services or direct-to-home satellite services.

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