HB 560: Joint county and municipal sales and use tax (LOST); negotiations for distribution of tax proceeds; revise provisions

This bill amends several parts of Georgia's sales and use tax code (O.C.G.A. Chapter 8, Title 48). Part I creates a new local sales tax exemption for construction materials used in school capital projects, but only for school systems that already have a base year value homestead exemption in place; school systems would apply for refunds of taxes paid, with the exemption expiring December 31, 2033. Part II adjusts the state's 2 percent cap on local sales taxes, carving out an exception for certain transit-related taxes tied to a 1964 constitutional amendment, and revises the rules for a special district sales tax used for property tax relief, including how absent municipalities are counted when an intergovernmental agreement is negotiated. Part III rewrites the joint county and municipal sales and use tax (LOST) law so that when a county, not just a municipality, refuses to sign the distribution certificate, its share is calculated the same way absent municipalities' shares are, based on population. It also exempts an absent county from a millage rate adjustment requirement while it holds that status. Part IV limits these LOST changes to certificates signed on or after January 1, 2028.

• Creates a new local sales tax exemption for construction materials used in school building projects, but only for districts with a base year value homestead exemption already in effect, expiring December 31, 2033.
• Adds a carve out to the state's 2 percent cap on local sales taxes for certain transit-related taxes authorized under a 1964 constitutional amendment.
• Revises the special district sales tax for property tax relief so a homestead exemption must already be in place before the tax can be imposed and clarifies how absent municipalities' shares of proceeds are calculated.
• Rewrites the joint county and municipal sales tax (LOST) law so an absent county, not just an absent municipality, has its share of proceeds calculated based on its unincorporated population when it does not sign the distribution certificate.
• Exempts a county treated as 'absent' under the LOST distribution rules from a related millage rate adjustment requirement during that period.
• Limits the new LOST distribution rules to certificates entered into on or after January 1, 2028.

Local school systems and school boards seeking construction tax refunds, county governments and city governments that negotiate sales tax distribution agreements, taxpayers in special tax districts subject to property tax relief sales taxes, and any county or municipality that declines to sign a joint county and municipal sales tax certificate.

Counties and cities regularly negotiate how to split local sales tax revenue, and disputes over who signs the agreement can affect how much money each government receives. This bill changes those calculations, adds a new tax break tied to school construction, and could shift how much revenue counties and cities collect starting in 2028.

• Section 1-1 adds O.C.G.A. § 48-8-3(10.1), exempting construction materials for certain school capital projects from local sales taxes, with refunds claimed by the school system and the exemption repealed December 31, 2033.
• Section 2-1 revises O.C.G.A. § 48-8-6(a), the 2 percent local sales tax cap, adding an exception for transit taxes tied to a 1964 constitutional amendment in counties with a specified existing tax.
• Section 2-2 revises O.C.G.A. § 48-8-109.31 to require a base year value or adjusted base year value homestead exemption be in effect before a special district property tax relief sales tax can be imposed.
• Section 2-3 adds a subsection to O.C.G.A. § 48-8-109.32 requiring a county resolution meeting agreement requirements if no intergovernmental agreement is otherwise required.
• Section 3-1 revises O.C.G.A. § 48-8-89 so that an absent county's share of LOST proceeds is calculated using the same population-based method used for absent municipalities.
• Section 3-3 adds O.C.G.A. § 48-8-91(c), exempting a county treated as absent under the LOST rules from a millage rate adjustment requirement during that time.
• Part IV (Section 4-1) limits the LOST distribution changes in Part III to distribution certificates entered into on or after January 1, 2028.

1. 2026-03-03House Committee Favorably Reported (House)
2. 2025-04-04House Withdrawn, Recommitted (House)
3. 2025-02-26House Committee Favorably Reported By Substitute (House)
4. 2025-02-21House Second Readers (House)
5. 2025-02-20House First Readers (House)
6. 2025-02-20House Hopper (House)

• Charles Martin (R, HD-049)Primary sponsor
• Shaw Blackmon (R, HD-146)
• Yasmin Neal (D, HD-079)

• local sales taxes
• LOST tax distribution
• property tax relief
• school construction funding
• county and city government finance