This year’s Georgia’s legislative session is quickly progressing, with some major tax legislation moving towards passage. Last Thursday, February 29, 2024 was “Crossover Day”—the 28th legislative day of 40 total legislative days—the day by which all bills must have passed one legislative chamber to cross over for consideration by the other chamber. Although there is an opportunity for tax provisions to be added to other bills later, bills that have not passed one chamber prior to Crossover Day are generally dead for this session. Georgia’s Constitution requires that all revenue related bills originate in the House, so the majority of bills still alive for the year now go over to the Senate Finance Committee for final passage by the Senate before the end of the session. The final (40th) legislative day, Sine Die, is on March 28, 2024.

Passed one Chamber and Crossing Over:

HR 598, HB 1267 – Georgia Tax Court. This legislation would create the Georgia Tax Court, transitioning the Georgia Tax Tribunal from an administrative court within the executive branch to a judicial branch court. This change would require a constitutional amendment, which would appear as a referendum question on the November 2024 ballot. If the constitutional referendum passes, HB 1267 provides the enabling legislation for the new Georgia Tax Court. The new Georgia Tax Court would generally operate similarly to the Georgia Tax Tribunal, but it would be able to hear constitutional issues and appeals would go directly to the Georgia Court of Appeals (as opposed to the current appeal process through the Fulton County Superior Court and then by application to the Georgia Court of Appeals). If enacted, the new Georgia Tax Court would begin operations on January 1, 2026, and begin receiving cases on August 1, 2026.

Income Tax

HB 814 – Non-Taxability of Federal Telecom Grants. This bill would exclude from Georgia taxable net income, federal grants and sub-grants received under the Broadband Equity, Access, and Deployment Program or the American Rescue Plan Act of 2021 for making investments in broadband infrastructure. The bill would be effective for tax years on or after January 1, 2022.

HB 1015 – Reduce Individual Income Tax Rate. This bill would expedite the state’s planned reduction of the individual income tax rate by lowering the rate from 5.49% to 5.39% for taxable years beginning after January 1, 2024.

HB 1023 – Match Corporate Income Tax Rate to Individual Income Tax Rate. This bill would match the tax rate that every domestic and foreign corporation will pay on Georgia taxable income to the rates prescribed for individual income tax (as proposed to be reduced in HB 1015) and would also apply the same rates to pass-through entity owners that elect to be taxed at the entity level. This bill would also extend the time a corporation may file its return by one month after the IRS filing deadline.

HB 1162 – Annual IRC Conformity.This bill is Georgia’s annual income tax conformity bill, which would conform Georgia’s revenue code to the federal Internal Revenue Code as of January 1, 2024. The House passed this bill on February 13, 2024 and the bill has also passed out of the Senate Finance Committee. It now awaits passage by the full Senate. No additional decoupling from federal tax law is proposed within this legislation.

HB 1180 – Film Tax Credit Limitations. This bill would make several changes to the film tax credit. Under the bill, there would be separate statutes and tax credits for “production companies” and “qualified interactive entertainment production companies.” The bill adds additional criteria to be eligible for the 10% additional credit, when at least four of those criteria are met. Additionally, the bill caps the amount of credits that can be sold or transferred at 2.5% of the corresponding fiscal year’s budget. The changes would become effective for tax years beginning January 1, 2026. This legislation is a result of the review of state tax incentives by the Joint Tax Credit Review Panel that held numerous hearings during 2023 subsequent to the last legislative session.

HB 1181 – Income Tax Credit Carryforward Period Reduction and Exemption/Credit Sunset.The bill would reduce the carryforward period for most income tax credits. For example, the carryforward period for the research and development credit, jobs tax credit, and investment tax credit would be reduced from 10 years to 5 years, although the current ability to apply certain of those excess credits against payroll withholding would not be impacted. Furthermore, the carryforward period for the Student Scholarship Organization and similar credits in exchange for donations would be reduced from 5 years to 3 years. The carryforward period changes would only apply to credits earned after the effective date of the legislation—January 1, 2025, and would not apply for those credits that taxpayers have already earned and can continue to carryforward. Additionally, the bill adds sunset dates for several existing incentives and sales tax exemptions to 2029. This legislation is also a result of the Joint Tax Credit Review Panel, discussed above.

Sales Tax

HB 1115 – New FLOST Authorization. This bill introduces a new flexible penny local option sales tax, in addition to the existing HOST and LOST sales tax in exchange for additional property tax relief. In general, the local sales tax rates is capped at 3%.

HB 1192 – Sunset for Data Center Exemption. This bill would place a pause on the Data Center Exemption in O.C.G.A. § 48-8-3(68.1) for the period beginning July 1, 2024 and ending June 30, 2026. HB 1192 would prohibit the issuance of new certificates of exemption during that period for eligible high-technology data center equipment, except for high-tech data center tenants of an ongoing project that were entered before July 1, 2024. This would significantly impact the extension of the Data Center Exemption through 2033 passed in the 2022 legislative session. The bill would also make changes to the new job requirement for Data centers. Additionally, the bill would create the Special Commission on Data Center Energy Planning to, among other things, review and make recommendations regarding the data center and its use of electricity and energy, which will likely result in amendments to the exemption when it automatically revives beginning July 1, 2026.

Property Taxes

HR 1022, HB 1185– State Homestead Exemption. This bill proposes a constitutional referendum relating to allowing for local option homestead exemptions from ad valorem taxes when the current year assessed value exceeds the inflation rate. If passed, HB 1185 is the legislation that would enact the constitutional amendment.

HB 1031 – Minimum Mandatory Reappraisal of Parcels. This bill proposes mandatory reappraisal of property parcels and provides requirements for ad valorem property tax bills. The bill also requires estimated roll-back rate information to appear on annual notices of current assessment and remove estimates of current year’s taxes from such assessments.

Other

SB 366 – Tax Expenditures Transparency Act of 2024. This bill expands the existing tax incentive audit process (under prior legislation in 2021, SB 6), by requiring listing state revenue sources and tax credit spending in the budget, increasing the number of annual audits, creating a comment period after initial audit results, and creating the Joint Committee on Taxation and Economic Development.

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