---
title: HB 1472. Income tax; term "small business"; revise definition
collection: bills
id: 2025-2026/hb1472
cite_as: HB 1472, 2025-2026 Regular Session (Ga.)
canonical_url: https://georgiacommons.org/bills/2025-2026/hb1472
md_url: https://georgiacommons.org/bills/2025-2026/hb1472.md
text_url: https://georgiacommons.org/bills/2025-2026/hb1472/text
source_url: https://www.legis.ga.gov/legislation/73734
date: 2026-03-04
status: introduced
corpus_version: bills-2026-09-13
license: Public record of the Georgia General Assembly, via LegiScan; see about.md
publisher: Georgia Commons, an independent project of Georgia Civic Data. Not the State of Georgia. Not legal advice.
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omitted: votes and history
omitted_chars: 129
omitted_url: https://georgiacommons.org/bills/2025-2026/hb1472.md?full=1
bill_number: HB 1472
session: 2025-2026 Regular Session
session_slug: 2025-2026
chamber: House
bill_type: bill
status_date: 2026-02-26
last_action: House Second Readers
sponsors:
- Marvin Lim
text_version: Introduced
has_text: true
legiscan_url: https://legiscan.com/GA/bill/HB1472/2025
upstream_id: 2125966
summaries_model: claude-sonnet-5
topic_tags:
- income tax
- small business definition
- state contracting
- minority business enterprise
- tax deductions
---
# HB 1472. Income tax; term "small business"; revise definition
## Text
House Bill 1472
By: Representative Lim of the 98th
A BILL TO BE ENTITLED
AN ACT
To amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated,
relating to imposition, rate, computation, exemptions, and credits for state income tax, so as
to revise the definition of the term "small business"; to provide for related matters; to provide
for an effective date and applicability; to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to
imposition, rate, computation, exemptions, and credits for state income tax, is amended by
revising Code Section 48-7-38, relating to deduction for payments to classified
subcontractors, disclosure of tax returns, and maintenance of list of classified subcontractors,
as follows:
"48-7-38.
(a) As used in this Code section, the term:
(1) 'Classified subcontractor' means a small business certified as a minority business
enterprise, women owned business, or veteran owned business under Code Section
50-5-132.
(2) 'Small business' shall have the same meaning as provided in Code Section 50-5-121
means a business that is independently owned and operated and has 300 or fewer
employees or $30 million or less in gross receipts per year.
(3) 'State contract' means a contract for the purchase by the state of goods, property, or
services or for the construction of any building or structure for the state, which contract
is executed by any department, board, bureau, commission, or agency of state
government, by any state authority, or by any officer, official, employee, or agent of any
of the foregoing.
(b) In computing Georgia taxable net income of a corporation, partnership, or individual,
there shall be subtracted from federal taxable income or federal adjusted gross income 10
percent of the amount of qualified payments to classified subcontractors. A payment to a
classified subcontractor shall be a qualified payment if:
(1) The payment is for goods, personal property, or services furnished by the classified
subcontractor to the taxpayer and delivered by the taxpayer to the state in furtherance of
a state contract to which the taxpayer is a party; and the payment does not exceed the
value of the goods, property, or services to the taxpayer;
(2) The payment is made during the taxable year for which the subtraction from federal
taxable income or federal adjusted gross income is claimed; and
(3) The payment is made to a small business which, at the time of the payment, is
certified as a minority business enterprise, women owned business, or veteran owned
business under Code Section 50-5-132.
(c) The total amount which may be subtracted under this Code section from federal taxable
income or federal adjusted gross income of any taxpayer shall be limited to $100,000.00
per taxable year.
(d) The department may disclose to the commissioner of administrative services the
income tax returns of taxpayers applying for certification as minority business enterprises,
women owned businesses, and veteran owned businesses under Code Section 50-5-132.
The commissioner of administrative services shall maintain and periodically revise a list
of classified subcontractors and shall make such list available to the department no later
than December 31 of each year and to the general public."
SECTION 2.
This Act shall become effective on July 1, 2026, and shall be applicable to all taxable years
beginning on or after January 1, 2027.
SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.
## Summaries written by Georgia Commons
The following was written by claude-sonnet-5 from the text above and is not part of the bill. Quote the text, not the summary.
A Georgia House bill would change how state tax law defines a 'small business,' setting a specific cap of 300 employees or $30 million in yearly revenue instead of relying on a separate code section's definition.
### Plain-language summary
Georgia offers a state income tax deduction to businesses that pay certified minority, women owned, or veteran owned subcontractors on state contracts. That deduction, found in O.C.G.A. § 48-7-38, depends on the subcontractor qualifying as a 'small business.' Currently the tax code borrows its small business definition from a different part of Georgia law (O.C.G.A. § 50-5-121).
This bill removes that cross-reference and writes a new definition directly into the tax code: a small business is one that is independently owned and operated with 300 or fewer employees or $30 million or less in gross receipts per year. The rest of the deduction, including the 10 percent subtraction and the $100,000 annual cap, stays the same. The change would take effect July 1, 2026, and apply to tax years starting on or after January 1, 2027.
### What it does
- Replaces the tax code's borrowed definition of 'small business' with a standalone definition written directly into O.C.G.A. § 48-7-38.
- Sets the new definition as a business that is independently owned and operated with 300 or fewer employees or $30 million or less in yearly gross receipts.
- Leaves unchanged the existing 10 percent tax deduction for qualified payments to certified minority, women owned, or veteran owned subcontractors.
- Keeps the $100,000 per taxable year cap on the amount a taxpayer can subtract using this deduction.
- Sets an effective date of July 1, 2026, applying to tax years beginning on or after January 1, 2027.
### Who it affects
Georgia businesses that hold state contracts and subtract payments to classified subcontractors from their taxable income, and the certified minority owned, women owned, and veteran owned subcontractors whose 'small business' status determines whether those payments qualify for the tax break.
### Why it matters
Because eligibility for the subcontractor tax deduction depends on whether a subcontractor counts as a small business, changing the definition could shift which companies qualify. A fixed employee and revenue cap written directly into the tax code could include or exclude businesses differently than the current cross-referenced definition.
### Key provisions
- Section 1 rewrites O.C.G.A. § 48-7-38(a)(2), deleting the reference to Code Section 50-5-121 and inserting a new definition based on employee count and gross receipts.
- The new definition sets two alternative thresholds: 300 or fewer employees, or $30 million or less in annual gross receipts.
- Section 1 leaves the definitions of 'classified subcontractor' and 'state contract' and the deduction mechanics in subsections (b) through (d) unchanged.
- Section 2 sets the effective date as July 1, 2026, applicable to taxable years beginning on or after January 1, 2027.
- Section 3 repeals any conflicting laws.
## Status
- Status: Introduced (2026-02-26)
- Last action: House Second Readers (2026-03-04)
- Sponsors: Marvin Lim
- Official page: https://www.legis.ga.gov/legislation/73734
> The history, votes, and amendments (129 characters) are at https://georgiacommons.org/bills/2025-2026/hb1472.md?full=1