HB880: HB880 Income tax; reduce tax rate that may be reached under certain conditions

25 LC 59 0364S House Bill 880 (COMMITTEE SUBSTITUTE) By: Representatives Blackmon of the 146th, Kelley of the 16th, Stephens of the 164th, Newton of the 127th, Martin of the 49th, and others A BILL TO BE ENTITLED AN ACT To amend Article 2 of Chapter 7 of Title 48 and Part 1 of Article 4 of Chapter 12 of Title 451 of the Official Code of Georgia Annotated, relating to the impo sition, rate, computation,2 exemptions, and credits relative to income taxes and management of budgetary and financial3 affairs, respectively, so as to reduce the income tax rate that may be reached under certain4 conditions; to provide for a gradual increase of the amount of the deduction from state5 taxable income for dependents that may be reached under certain conditions; to provide for6 a gradual increase of the amount of the standard deduction from state taxable income for7 individuals that may be reached under certain conditions; to provide for an increase in the8 amount of retirement income that may be excluded from state taxable income for individuals9 65 or older; to provide for certain amounts of the Revenue Shortfall Reserve to be used for10 tax relief; to increase the limitation on the maximum percentage of net revenue allowed to11 be held in the Revenue Shortfall Reserve; to remove outdated pr ovisions; to provide for12 related matters; to provide for an effective date and applicability; to repeal conflicting laws;13 and for other purposes.14 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:15 H. B. 880 (SUB) - 1 - 25 LC 59 0364S SECTION 1.16 Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to the17 imposition, rate, computation, exemptions, and credits relative to income taxes, is amended18 in Code Section 48-7-20, relating to individual tax rates, cred it for withholding and other19 payments, and applicability to estates and trusts, by revising subsection (a.1) as follows:20 "(a.1)(1) On and after January 1, 2025, the tax imposed pursuant to subsection (a) of this21 Code section shall be 5.19 percent for taxable years beginning on or after22 January 1, 2025; provided, however, that such rate shall be red uced by 0.10 percent23 annually beginning on January 1, 2026, until the rate reaches 4.99 percent, 3.99 percent;24 provided that such annual reductions in the tax rate shall be subject to delays as provided25 in paragraph (2) of this subsection delayed by one year for each year that prospective26 annual reductions in the standard deduction are delayed for any of the reasons provided27 in paragraph (1.1) of subsection (a) of Code Section 48-7-27.28 (2) Each prospective annual reduction in the tax rate that wou ld otherwise occur as29 provided in paragraph (1) of this subsection shall be delayed by one year for each year30 that any of the following are true as of December 1:31 (A) The Governor's revenue estimate for the succeeding fiscal year is not at least 332 percent above the Governor's revenue estimate for the present fiscal year;33 (B) The prior fiscal year's net revenue collection was not hig her than each of the34 preceding three fiscal years' net tax revenue collection; or35 (C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not36 contain a sum that exceeds the amount of the decrease in state revenue projected to37 occur as a result of the prospective reduction in the tax rates set to occur the following38 year.39 (3) The Office of Planning and Budget shall make the determina tions necessary to40 implement the provisions of paragraph (2) of this subsection an d shall report its41 determinations by December 1 of each year to the department, the Speaker of the House42 H. B. 880 (SUB) - 2 - 25 LC 59 0364S of Representatives, the President of the Senate, and the chairp ersons of the House43 Committee on Appropriations Committee, the House Committee on W ays and Means44 Committee, the Senate Appropriations Committee, and the Senate Finance Committee. 45 This paragraph shall not be applicable after the final reduction to the rate of 4.99 percent46 occurs."47 SECTION 2.48 Said article is further amended by revising subsection (b) of Code Section 48-7-26, relating49 to personal exemptions, as follows:50 "(b) Each taxpayer shall be allowed as a deduction in computing his or her Georgia taxable51 income a personal exemption in the amount of $4,000.00 for each dependent of such52 taxpayer; provided, however, that such deduction shall be increased by $200.00 annually53 beginning on January 1, 2027, until such deduction reaches $6,000.00, provided that such54 increases in such deduction shall be subject to the same delays as those applied to standard55 deductions as provided in paragraph (1.1) of subsection (a) of Code Section 48-7-27."56 SECTION 3.57 Said article is further amended in subsection (a) of Code Secti on 48-7-27, relating to58 computation of taxable net income, by revising the introductory language and paragraph (1),59 by adding a new paragraph and a new division, and by revising divisions (a)(5)(A)(xii) and60 (a)(5)(A)(xiii) to read as follows:61 "(a) Georgia taxable net income of an individual shall be the t axpayer's federal adjusted62 gross income, as defined in the United States Internal Revenue Code of 1986, less:63 (1) At the taxpayer's election, either:64 (A) The sum of all itemized nonbusiness deductions used in computing such taxpayer's65 federal taxable income; or66 (B) A standard deduction in an amount as follows:67 H. B. 880 (SUB) - 3 - 25 LC 59 0364S (i) In the case of a married couple filing a joint return, $24 ,000.00; provided,68 however, that such deduction shall be increased by $1,200.00 annually beginning on69 January 1, 2027, until such deduction reaches $36,000.00, provi ded that such70 increases in such deduction shall be subject to delays as provided in paragraph (1.1)71 of this subsection; or72 (ii) In the case of a single taxpayer, head of household, or married taxpayer filing a73 separate return, $12,000.00; provided, however, that such deduction shall be increased74 by $600.00 annually beginning on Ja nuary 1, 2027, until such de duction reaches75 $18,000.00, provided that such increases in such deduction shall be subject to delays76 as provided in paragraph (1.1) of this subsection;77 (1.1)(A) Each prospective increase in the standard deduction t hat would otherwise78 occur as provided in divisions (i) and (ii) of subparagraph (B) of paragraph (1) of this79 subsection shall be delayed by one year for each year that any of the following are true80 as of December 1:81 (i) The Governor's revenue estimate for the succeeding fiscal year is not at least 382 percent above the Governor's revenue estimate for the present fiscal year;83 (ii) The prior fiscal year's net revenue collection was not hi gher than each of the84 preceding three fiscal years' net tax revenue collection; or85 (iii) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not86 contain a sum that exceeds the amount of the decrease in state revenue projected to87 occur as a result of the prospective reduction in the tax rates set to occur the following88 year.89 (B) The Office of Planning and Budget shall make the determina tions provided in90 subparagraph (A) of this paragraph and shall report its determinations by December 191 of each year to the department, the Speaker of the House of Rep resentatives, the92 President of the Senate, and the chairpersons of the House Comm ittee on93 Appropriations, the House Committee on Ways and Means , the Senate Appropriations94 H. B. 880 (SUB) - 4 - 25 LC 59 0364S Committee, and the Senate Finance Committee. This paragraph shall not be applicable95 after the final increases in the standard deductions provided under divisions (i) and (ii)96 of subparagraph (B) of paragraph (1) of this subsection occur;"97 "(xii) For taxable years beginning on or after January 1, 2008, and prior to January98 1, 2012, retirement income from any source not to exceed an exc lusion amount of99 $35,000.00; and100 (xiii) For taxable years beginning on or after January 1, 2012 , and ending on or101 before December 31, 2026 , retirement income from any source not to exceed an102 exclusion amount of $35,000.00 for each taxpayer meeting the eligibility requirement103 set forth in division (i) or (ii) of subparagraph (D) of this paragraph or an amount of104 $65,000.00 for each taxpayer meeting the eligibility requirement set forth in division105 (iii) of subparagraph (D) of this paragraph; and106 (xiv) For taxable years beginning on or after January 1, 2027, retirement income from107 any source not to exceed an exclusion amount of $35,000.00 for each taxpayer108 meeting the eligibility requirement set forth in division (i) or (ii) of subparagraph (D)109 of this paragraph or an amount of $70,000.00 for each taxpayer meeting the eligibility110 requirement set forth in division (iii) of subparagraph (D) of this paragraph."111 SECTION 4.112 Part 1 of Article 4 of Chapter 12 of Title 45 of the Official C ode of Georgia Annotated,113 relating to management of budgetary and financial affairs, is a mended by revising Code114 Section 45-12-93, relating to revenue shortfall reserve, reserv ation of surplus state funds,115 appropriation and release of funds, and limitations, as follows:116 "45-12-93.117 (a) There shall be a reserve of state funds known as the 'Revenue Shortfall Reserve.'118 (b) The amount of all surplus in state funds existing as of the end of each fiscal year shall119 be reserved and added to the Revenue Shortfall Reserve. Funds in the Revenue Shortfall120 H. B. 880 (SUB) - 5 - 25 LC 59 0364S Reserve shall carry forward from fiscal year to fiscal year, without reverting to the general121 fund at the end of a fiscal year. The Revenue Shortfall Reserv e shall be maintained,122 accumulated, appropriated, and otherwise disbursed only as provided in this Code section.123 (c) For each existing fiscal year, the General Assembly may appropriate from the Revenue124 Shortfall Reserve an amount up to 1 percent of the net revenue collections of the preceding125 fiscal year for funding increased K-12 needs.126 (d) The Governor may release for appropriation by the General Assembly a stated amount127 from funds in the Revenue Shortfall Reserve that are in excess of 4 8 percent of the net128 revenue of the preceding fiscal year.129 (e) As of the end of each fiscal year, an amount shall be rele ased from the Revenue130 Shortfall Reserve to the general fund to cover any deficit by which total expenditures and131 contractual obligations of state funds authorized by appropriation exceed net revenue and132 other amounts in state funds made available for appropriation.133 (f) The combined Revenue Shortfall Reserve and the Midyear Adj ustment Reserve134 existing on May 9, 2005, shall become the Revenue Shortfall Reserve provided for in this135 Code section.136 (g) Any other provision of law notwithstanding, the General As sembly is authorized to137 appropriate $7 million for State Fiscal Year 2005 from the Revenue Shortfall Reserve.138 (h) The Revenue Shortfall Reserve shall not exceed 15 20 percent of the previous fiscal139 year's net revenue for any given fiscal year. Any amount of undesignated surplus funds in140 excess of 20 percent of the previous fiscal year's net revenue may be used for tax relief141 pursuant to Acts of the General Assembly."142 SECTION 5.143 This Act shall become effective on January 1, 2027, and shall b e applicable to all taxable144 years beginning on or after January 1, 2027.145 H. B. 880 (SUB) - 6 - 25 LC 59 0364S SECTION 6.146 All laws and parts of laws in conflict with this Act are repealed.147 H. B. 880 (SUB) - 7 -