HB 316: Income tax; credit equal to 20 percent of the federal earned income tax credit; provide

Georgia currently has no state-level earned income tax credit, even though many Georgians qualify for the federal earned income tax credit under Section 32 of the Internal Revenue Code. This bill would add a new section to Georgia's income tax code creating a state credit worth 20 percent of whatever federal earned income tax credit a taxpayer receives. The credit could only be claimed if the taxpayer would have qualified for the federal credit, factoring in any net operating loss carryforward used in that federal calculation. If the credit is larger than what the taxpayer owes in state income tax, the extra amount would not be refunded or carried to another tax year. The Georgia Department of Revenue commissioner would be allowed to write rules to administer the credit. The change would take effect July 1, 2025, and apply to tax years starting on or after January 1, 2025.

• Creates a new Georgia income tax credit (O.C.G.A. § 48-7-29.28) equal to 20 percent of a taxpayer's federal earned income tax credit.
• Limits eligibility to taxpayers who would qualify for the federal credit, including after accounting for certain net operating loss carryforwards.
• Bars any unused portion of the credit from being refunded to the taxpayer or carried forward or back to other tax years.
• Authorizes the state revenue commissioner to create rules and regulations to put the credit into practice.
• Sets the effective date as July 1, 2025, applying to tax years beginning on or after January 1, 2025.

Georgia taxpayers who qualify for the federal earned income tax credit, typically lower and moderate income working individuals and families, would be eligible for the new state credit. The Georgia Department of Revenue would also be affected, since it would administer and write rules for the credit.

Eligible working Georgians could see a reduction in their state income tax bill tied to their federal earned income tax credit, potentially easing the tax burden for lower income households. Because the credit is nonrefundable, it would only offset taxes owed and would not provide a cash refund beyond that.

• Section 1 adds new Code Section 48-7-29.28 creating a state income tax credit equal to 20 percent of the taxpayer's federal earned income tax credit under Internal Revenue Code Section 32.
• Subsection (a) ties eligibility to whether the taxpayer would have received the federal credit, including after adding back certain net operating loss carryforwards.
• Subsection (b) makes the credit nonrefundable, meaning any excess over the taxpayer's tax liability is lost rather than refunded or carried to other years.
• Subsection (c) gives the state revenue commissioner authority to issue rules and regulations implementing the credit.
• Section 2 sets the effective date as July 1, 2025, applying to tax years beginning on or after January 1, 2025.

1. 2025-02-11House Second Readers (House)
2. 2025-02-10House First Readers (House)
3. 2025-02-06House Hopper (House)

• Samuel Park (D, HD-107)Primary sponsor
• Mack Jackson (D, HD-128)
• Tangie Herring (D, HD-145)
• Floyd Griffin (D, HD-149)
• Patty Stinson (D, HD-150)

• income tax
• earned income tax credit
• tax credits
• state budget
• low income families