HB 99: Income tax; credit based upon the federal qualified child and dependent care tax credit; revise

Georgia currently lets taxpayers claim a state income tax credit worth 30 percent of the federal child and dependent care tax credit (allowed under Section 21 of the Internal Revenue Code), and any unused credit is lost rather than refunded or carried forward. House Bill 99 rewrites this part of Georgia's tax code (O.C.G.A. § 48-7-29.10) to raise that percentage to 100 percent of the federal credit for tax years beginning on or after January 1, 2025. The bill also adds a new rule: if the state credit ends up larger than what a taxpayer owes in state income tax, the state would refund the difference rather than simply letting it go unused. The change would take effect July 1, 2025, and would apply to tax years starting on or after January 1, 2025.

• Increases the state child and dependent care tax credit from 30 percent to 100 percent of the federal credit allowed under Section 21 of the Internal Revenue Code, starting in tax year 2025.
• Adds a new provision making the credit refundable for 2025 and later, so taxpayers get back any amount of the credit that exceeds their state income tax bill.
• Keeps in place the existing rule that the credit still cannot be carried forward to future tax years or applied to past years' tax liability.
• Sets the law's effective date as July 1, 2025, applying retroactively to tax years beginning on or after January 1, 2025.

Georgia taxpayers who pay for child care or dependent care and claim the federal child and dependent care tax credit on their federal returns, including working parents and caregivers of dependents. The Georgia Department of Revenue would also be affected, since it administers the credit and would need to process refunds.

Families who qualify for the federal child and dependent care credit would see a much larger state tax benefit, jumping from 30 percent to 100 percent of the federal amount. Because the credit becomes refundable, families with little or no state tax liability could receive cash back rather than losing the unused portion.

• Section 1 amends O.C.G.A. § 48-7-29.10 to change the credit percentage from 30 percent to 100 percent of the federal qualified child and dependent care credit for taxable years beginning on or after January 1, 2025.
• Section 1 adds new subsection (b.1), making the credit refundable starting in tax year 2025 when the credit amount exceeds the taxpayer's income tax liability.
• Section 1 keeps existing subsection (b), which still bars carrying forward unused credit to future years or applying it to prior years' tax liability.
• Section 2 sets the effective date as July 1, 2025, and applies the changes to all taxable years beginning on or after January 1, 2025.
• Section 3 repeals any conflicting laws.

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

• Carolyn Hugley (D, HD-141)Primary sponsor
• Karen Bennett (D, HD-094)
• Debbie Buckner (D, HD-137)
• Tangie Herring (D, HD-145)
• Jasmine Clark (D, HD-108)
• Mary Williams (D, HD-037)

• income tax credits
• child care costs
• dependent care
• tax refunds
• family tax benefits