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 45
of the Official Code of Georgia Annotated, relating to the imposition, rate, computation,
exemptions, and credits relative to income taxes and management of budgetary and financial
affairs, respectively, so as to reduce the income tax rate that may be reached under certain
conditions; to provide for a gradual increase of the amount of the deduction from state
taxable income for dependents that may be reached under certain conditions; to provide for
a gradual increase of the amount of the standard deduction from state taxable income for
individuals that may be reached under certain conditions; to provide for an increase in the
amount of retirement income that may be excluded from state taxable income for individuals
65 or older; to provide for certain amounts of the Revenue Shortfall Reserve to be used for
tax relief; to increase the limitation on the maximum percentage of net revenue allowed to
be held in the Revenue Shortfall Reserve; to remove outdated provisions; to provide for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 the
imposition, rate, computation, exemptions, and credits relative to income taxes, is amended
in Code Section 48-7-20, relating to individual tax rates, credit for withholding and other
payments, and applicability to estates and trusts, by revising subsection (a.1) as follows:
"(a.1)(1) On and after January 1, 2025, the tax imposed pursuant to subsection (a) of this
Code section shall be 5.19 percent for taxable years beginning on or after
January 1, 2025; provided, however, that such rate shall be reduced by 0.10 percent
annually beginning on January 1, 2026, until the rate reaches <del>4.99 percent,</del> <ins>3.99 percent;
</ins> provided that such annual reductions in the tax rate shall be <del>subject to delays as provided
in paragraph (2) of this subsection</del> <ins>delayed by one year for each year that prospective
annual reductions in the standard deduction are delayed for any of the reasons provided
in paragraph (1.1) of subsection (a) of Code Section 48-7-27.
</ins> <del>(2) Each prospective annual reduction in the tax rate that would otherwise occur as
provided in paragraph (1) of this subsection shall be delayed by one year for each year
that any of the following are true as of December 1:
(A) The Governor's revenue estimate for the succeeding fiscal year is not at least 3
percent above the Governor's revenue estimate for the present fiscal year;
(B) The prior fiscal year's net revenue collection was not higher than each of the
preceding three fiscal years' net tax revenue collection; or
(C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not
contain a sum that exceeds the amount of the decrease in state revenue projected to
occur as a result of the prospective reduction in the tax rates set to occur the following
year.
(3) The Office of Planning and Budget shall make the determinations necessary to
implement the provisions of paragraph (2) of this subsection and shall report its
determinations by December 1 of each year to the department, the Speaker of the House
</del>
<del>of Representatives, the President of the Senate, and the chairpersons of the House
Committee on Appropriations Committee, the House Committee on Ways and Means
Committee, the Senate Appropriations Committee, and the Senate Finance Committee.
This paragraph shall not be applicable after the final reduction to the rate of 4.99 percent
occurs."
</del> SECTION 2.
Said article is further amended by revising subsection (b) of Code Section 48-7-26, relating
to personal exemptions, as follows:
"(b) Each taxpayer shall be allowed as a deduction in computing his or her Georgia taxable
income a personal exemption in the amount of $4,000.00 for each dependent of such
taxpayer; <ins>provided, however, that such deduction shall be increased by $200.00 annually
beginning on January 1, 2027, until such deduction reaches $6,000.00, provided that such
increases in such deduction shall be subject to the same delays as those applied to standard
deductions as provided in paragraph (1.1) of subsection (a) of Code Section 48-7-27."
</ins> SECTION 3.
Said article is further amended in subsection (a) of Code Section 48-7-27, relating to
computation of taxable net income, by revising the introductory language and paragraph (1),
by adding a new paragraph and a new division, and by revising divisions (a)(5)(A)(xii) and
(a)(5)(A)(xiii) to read as follows:
"(a) Georgia taxable net income of an individual shall be the taxpayer's federal adjusted
gross income, as defined in the <del>United States</del> Internal Revenue Code of 1986, less:
(1) At the taxpayer's election, either:
(A) The sum of all itemized nonbusiness deductions used in computing such taxpayer's
federal taxable income; or
(B) A standard deduction in an amount as follows:
(i) In the case of a married couple filing a joint return, $24,000.00; <ins>provided,
however, that such deduction shall be increased by $1,200.00 annually beginning on
January 1, 2027, until such deduction reaches $36,000.00, provided that such
increases in such deduction shall be subject to delays as provided in paragraph (1.1)
of this subsection;</ins> or
(ii) In the case of a single taxpayer, head of household, or married taxpayer filing a
separate return, $12,000.00; <ins>provided, however, that such deduction shall be increased
by $600.00 annually beginning on January 1, 2027, until such deduction reaches
$18,000.00, provided that such increases in such deduction shall be subject to delays
as provided in paragraph (1.1) of this subsection;
(1.1)(A) Each prospective increase in the standard deduction that would otherwise
occur as provided in divisions (i) and (ii) of subparagraph (B) of paragraph (1) of this
subsection shall be delayed by one year for each year that any of the following are true
as of December 1:
(i) The Governor's revenue estimate for the succeeding fiscal year is not at least 3
percent above the Governor's revenue estimate for the present fiscal year;
(ii) The prior fiscal year's net revenue collection was not higher than each of the
preceding three fiscal years' net tax revenue collection; or
(iii) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not
contain a sum that exceeds the amount of the decrease in state revenue projected to
occur as a result of the prospective reduction in the tax rates set to occur the following
year.
(B) The Office of Planning and Budget shall make the determinations provided in
subparagraph (A) of this paragraph and shall report its determinations by December 1
of each year to the department, the Speaker of the House of Representatives, the
President of the Senate, and the chairpersons of the House Committee on
Appropriations, the House Committee on Ways and Means , the Senate Appropriations
</ins>
<ins>Committee, and the Senate Finance Committee. This paragraph shall not be applicable
after the final increases in the standard deductions provided under divisions (i) and (ii)
of subparagraph (B) of paragraph (1) of this subsection occur;"
</ins> "(xii) For taxable years beginning on or after January 1, 2008, and prior to January
1, 2012, retirement income from any source not to exceed an exclusion amount of
$35,000.00; <del>and
</del> (xiii) For taxable years beginning on or after January 1, 2012, <ins>and ending on or
before December 31, 2026,</ins> retirement income from any source not to exceed an
exclusion amount of $35,000.00 for each taxpayer meeting the eligibility requirement
set forth in division (i) or (ii) of subparagraph (D) of this paragraph or an amount of
$65,000.00 for each taxpayer meeting the eligibility requirement set forth in division
(iii) of subparagraph (D) of this paragraph; <ins>and
(xiv) For taxable years beginning on or after January 1, 2027, retirement income from
any source not to exceed an exclusion amount of $35,000.00 for each taxpayer
meeting the eligibility requirement set forth in division (i) or (ii) of subparagraph (D)
of this paragraph or an amount of $70,000.00 for each taxpayer meeting the eligibility
requirement set forth in division (iii) of subparagraph (D) of this paragraph."
</ins> SECTION 4.
Part 1 of Article 4 of Chapter 12 of Title 45 of the Official Code of Georgia Annotated,
relating to management of budgetary and financial affairs, is amended by revising Code
Section 45-12-93, relating to revenue shortfall reserve, reservation of surplus state funds,
appropriation and release of funds, and limitations, as follows:
"45-12-93.
(a) There shall be a reserve of state funds known as the 'Revenue Shortfall Reserve.'
(b) The amount of all surplus in state funds existing as of the end of each fiscal year shall
be reserved and added to the Revenue Shortfall Reserve. Funds in the Revenue Shortfall
Reserve shall carry forward from fiscal year to fiscal year, without reverting to the general
fund at the end of a fiscal year. The Revenue Shortfall Reserve shall be maintained,
accumulated, appropriated, and otherwise disbursed only as provided in this Code section.
(c) For each existing fiscal year, the General Assembly may appropriate from the Revenue
Shortfall Reserve an amount up to 1 percent of the net revenue collections of the preceding
fiscal year for funding increased K-12 needs.
(d) The Governor may release for appropriation by the General Assembly a stated amount
from funds in the Revenue Shortfall Reserve that are in excess of <del>4</del> <ins>8</ins> percent of the net
revenue of the preceding fiscal year.
(e) As of the end of each fiscal year, an amount shall be released from the Revenue
Shortfall Reserve to the general fund to cover any deficit by which total expenditures and
contractual obligations of state funds authorized by appropriation exceed net revenue and
other amounts in state funds made available for appropriation.
(f) <del>The combined Revenue Shortfall Reserve and the Midyear Adjustment Reserve
existing on May 9, 2005, shall become the Revenue Shortfall Reserve provided for in this
Code section.
(g) Any other provision of law notwithstanding, the General Assembly is authorized to
appropriate $7 million for State Fiscal Year 2005 from the Revenue Shortfall Reserve.
(h)</del> The Revenue Shortfall Reserve shall not exceed <del>15</del> <ins>20</ins> percent of the previous fiscal
year's net revenue for any given fiscal year. <ins>Any amount of undesignated surplus funds in
excess of 20 percent of the previous fiscal year's net revenue may be used for tax relief
pursuant to Acts of the General Assembly."
</ins> SECTION 5.
This Act shall become effective on January 1, 2027, and shall be applicable to all taxable
years beginning on or after January 1, 2027.
SECTION 6.
All laws and parts of laws in conflict with this Act are repealed.