HB 616: Income tax; depreciation for single-family residential rental property; revise a deduction

Under current Georgia tax law, corporations can subtract a Section 179 depreciation deduction from their taxable income, a federal tax break originally meant for business equipment that Georgia allows for certain property. This bill would carve out an exception: for taxable years beginning on or after January 1, 2026, corporations could no longer use this deduction for single-family residential rental property. The bill amends two sections of Georgia's income tax code, one covering corporate taxation (O.C.G.A. § 48-7-21) and one covering computation of taxable income (O.C.G.A. § 48-7-27). Both are changed the same way: the Section 179 deduction no longer applies to single-family rental homes, and if a corporation had already taken such a deduction on that kind of property, the amount must be added back into its taxable income. The change takes effect January 1, 2026, and applies to all tax years starting on or after that date.

• Blocks corporations from claiming the Section 179 depreciation deduction on single-family residential rental property for tax years starting in 2026 or later.
• Requires corporations that already took this deduction on single-family rental homes to add that amount back into their taxable income.
• Applies the same change in two separate parts of Georgia's income tax code, one dealing with corporate taxes and one dealing with computing taxable income.
• Sets the effective date as January 1, 2026, applying to all tax years beginning on or after that date.

Corporations that own and rent out single-family homes in Georgia, particularly large landlords or investment firms that use this federal depreciation deduction to lower their state tax bills. Georgia's Department of Revenue would also need to apply the revised rules.

Corporate owners of single-family rental homes would lose a tax deduction they currently rely on, which could raise their state tax bills starting in 2026. This could affect decisions by corporate landlords about buying, holding, or renting out single-family homes in Georgia.

• Section 1 revises O.C.G.A. § 48-7-21(b)(14) to exclude single-family residential rental property from the Section 179 deduction for corporations starting in 2026.
• Section 1 also requires corporations to add back to taxable income any Section 179 deduction previously taken on such rental property.
• Section 2 makes the identical change to O.C.G.A. § 48-7-27(a)(15), which governs computation of taxable income.
• Section 3 sets the effective date as January 1, 2026, applying to all taxable years beginning on or after that date.
• Section 4 repeals any conflicting laws, a standard technical provision.

1. 2025-02-27House Second Readers (House)
2. 2025-02-26House First Readers (House)
3. 2025-02-24House Hopper (House)

• Ruwa Romman (D, HD-97)Primary sponsor
• Spencer Frye (D, HD-122)
• El-Mahdi Holly (D, HD-116)
• Bryce Berry (D, HD-56)

• income tax
• rental property
• corporate taxes
• housing policy