HB 95: Income tax; credit equal to 20 percent of the federal earned income tax credit; provide

Georgia currently does not have a state-level earned income tax credit, a benefit that reduces taxes for low- and moderate-income workers based on their earnings. This bill would add one by inserting a new section into Georgia's income tax code (O.C.G.A. Title 48, Chapter 7). Under the bill, a taxpayer who qualifies for the federal earned income tax credit could also claim a Georgia credit equal to 20 percent of that federal amount. The credit is refundable, meaning if it is larger than what the taxpayer owes in state income tax, the state would pay out the difference rather than just zeroing out the tax bill. The state tax commissioner would be allowed to write rules for administering 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 equal to 20 percent of whatever federal earned income tax credit a taxpayer qualifies for under federal law.
• Makes the credit refundable, so taxpayers get the excess amount paid to them if the credit is larger than their state income tax bill.
• Ties eligibility to the federal credit calculation, including any net operating loss carryforward adjustments used to determine federal eligibility.
• Gives the state tax commissioner authority to create rules and regulations to administer the new credit.
• 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 low- to moderate-income workers and families, would be able to claim the new state credit. The Georgia Department of Revenue would also be responsible for administering the credit and writing implementing rules.

Eligible Georgia workers would receive an additional refund or tax reduction worth 20 percent of their federal earned income tax credit, which could mean extra money in hand for lower-income households, particularly because the credit is refundable rather than capped at reducing tax owed to zero.

• Section 1 adds new Code Section 48-7-29.28, creating a state credit equal to 20 percent of the taxpayer's federal earned income tax credit under Section 32 of the Internal Revenue Code.
• Subsection (a) ties eligibility to whether the taxpayer would have received the federal credit after accounting for net operating loss carryforwards.
• Subsection (b) makes the credit refundable, requiring the state to refund any amount exceeding the taxpayer's income tax liability.
• Subsection (c) authorizes the commissioner to issue rules and regulations to implement the credit.
• Section 2 sets the effective date of July 1, 2025, applicable to taxable years beginning on or after January 1, 2025.

1. 2025-01-28House Second Readers (House)
2. 2025-01-27House First Readers (House)
3. 2025-01-17House Hopper (House)

• Samuel Park (D, HD-107)Primary sponsor
• Mack Jackson (D, HD-128)
• Floyd Griffin (D, HD-149)
• Tangie Herring (D, HD-145)
• Jasmine Clark (D, HD-108)
• Mary Williams (D, HD-037)

• income tax credit
• earned income tax credit
• tax refunds
• low-income tax relief