SB477: SB477 Income Taxes; personal income tax rate; reduce

26 LC 59 0311 Senate Bill 477 By: Senators Tillery of the 19th, Walker III of the 20th, Anavitarte of the 31st, Gooch of the 51st, Robertson of the 29th and others AS PASSED SENATE A BILL TO BE ENTITLED AN ACT To amend Article 2 of Chapter 7 of Title 48 of the Official Cod e of Georgia Annotated,1 relating to the imposition, rate, computation, exemptions, and credits relative to income2 taxes, so as to reduce the personal income tax rate; to revise provisions relative to annual3 reductions of the income tax; to reduce the rates of taxation o n corporate and partnership4 income; to increase the amount of the standard deduction from s tate taxable income for5 individuals; to provide for related matters; to provide for an effective date and applicability;6 to repeal conflicting laws; and for other purposes.7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:8 SECTION 1.9 Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to the10 imposition, rate, computation, exemptions, and credits relative to income taxes, is amended11 by revising subsection (a.1) of Code Section 48-7-20, relating to individual tax rates, credit12 for withholding and other payments, and applicability to estates and trusts, as follows:13 "(a.1)(1) On and after January 1, 2025, the The tax imposed pursuant to subsection (a)14 of this Code section shall be 5.19 percent for taxable years beginning on or after January15 1, 2025; provided, however, that such rate shall be reduced by 0.10 percent annually16 beginning on January 1, 2026, until the rate reaches 4.99 perce nt, provided that such17 S. B. 477 - 1 - 26 LC 59 0311 annual reductions in the tax rate shall be subject to delays as provided in paragraph (2)18 of this subsection as follows: 19 (A) For the taxable year beginning on January 1, 2026, 4.99 percent;20 (B) For the taxable year beginning on January 1, 2027, 4.49 percent; and21 (C) For taxable years beginning on or after January 1, 2028, 3.99 percent,22 provided that such annual reductions in the tax rate shall be subject to delays as provided23 in paragraph (2) of this subsection.24 (2) Each prospective annual reduction in the tax rate that wou ld otherwise occur as25 provided in paragraph (1) of this subsection shall be delayed by one year for each year26 that any of the following are true as of December 1:27 (A) The Governor's revenue estimate for the succeeding fiscal year is not at least 3 128 percent above the Governor's revenue estimate for the present fiscal year;29 (B) The prior fiscal year's net revenue collection was not hig her than each of the30 preceding three fiscal years' net tax revenue collection; or31 (C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not32 contain a sum that exceeds the amount of the decrease in state revenue projected to33 occur as a result of the prospective reduction in the tax rates set to occur the following34 year.35 (3) The Office of Planning and Budget shall make the determina t i o n s n e c e s s a r y t o36 implement the provisions of paragraph (2) of this subsection an d shall report its37 determinations by December 1 of each year to the department, the Speaker of the House38 of Representatives, the President of the Senate, and the chairp ersons of the House39 Appropriations Committee, the House Ways and Means Committee, t he Senate40 Appropriations Committee, and the Senate Finance Committee. This paragraph shall not41 be applicable after the final reduction to the rate of 4.99 3.99 percent occurs."42 SECTION 2.43 S. B. 477 - 2 - 26 LC 59 0311 Said article is further amended by revising subsection (a) and division (b)(7)(C)(ii) of Code44 Section 48-7-21, relating to taxation of corporations, as follows:45 "(a) Every domestic corporation and every foreign corporation s hall pay annually an46 income tax on equivalent to 4.99 percent of its Georgia taxable net income at the same rate47 of the tax imposed on individuals under subsection (a.1) of Code Section 48-7-20 for the48 corresponding taxable year . Georgia taxable net income of a corporation shall be the49 corporation's taxable income from property owned or from business done in this state. A50 corporation's taxable income from property owned or from business done in this state shall51 consist of the corporation's taxable income as defined in the I nternal Revenue Code52 of 1986, with the adjustments provided for in subsection (b) of this Code section and53 allocated and apportioned as provided in Code Section 48-7-31."54 "(ii) Notwithstanding the provisions of subparagraph (B) of thi s paragraph, an55 electing Subchapter 'S' corporation, with respect to a taxable period, shall pay an56 income tax on equivalent to 4.99 percent of its net income at the same rate of the tax57 imposed on individuals under subsection (a.1) of Code Section 4 8-7-20 for the58 corresponding taxable year as computed pursuant to this Code section, and allocated59 and apportioned pursuant to Code Section 48-7-31, for such taxable period, and such60 shareholders shall not recognize their respective share of the portion of income on61 which tax was actually paid pursuant to this subparagraph."62 SECTION 3.63 Said article is further amended by revising paragraph (3) of su bsection (b) of Code64 Section 48-7-23, relating to taxation of partnerships, computat ion of net income,65 disallowance of charitable contributions, individual liability of partners, individual returns66 of distributive shares, taxable years, and elections, as follows:67 "(3) Notwithstanding subsection (a) of this Code section, an el ecting partnership with68 respect to a taxable period shall pay an income tax on equivalent to 4.99 percent of its net69 S. B. 477 - 3 - 26 LC 59 0311 income at the same rate of the tax imposed on individuals under subsection (a.1) of Code70 Section 48-7-20 for the corresponding taxable year as computed pursuant to this Code71 Section section, and allocated and apportioned pursuant to Code Section 48-7-3 1, for72 such taxable period, and such partners shall not recognize thei r respective share of the73 portion of income on which tax was actually paid pursuant to this subsection."74 SECTION 4.75 Said article is further amended by revising the introductory language and paragraph (1) of76 subsection (a) of Code Section 48- 7-27, relating to computation of taxable net income, as77 follows:78 "(a) Georgia taxable net income of an individual shall be the taxpayer's federal adjusted79 gross income, as defined in the United States Internal Revenue Code of 1986, less:80 (1) At the taxpayer's election, either:81 (A) The sum of all itemized nonbusiness deductions used in computing such taxpayer's82 federal taxable income; or83 (B) A standard deduction in an amount as follows:84 (i) In the case of a married couple filing a joint return, $24,000.00 $32,000.00; or85 (ii) In the case of a single taxpayer, head of household, or married taxpayer filing a86 separate return, $12,000.00 $16,000.00;"87 SECTION 5.88 This Act shall become effective on July 1, 2026, and shall be applicable to all taxable years89 beginning on or after January 1, 2026.90 SECTION 6.91 All laws and parts of laws in conflict with this Act are repealed.92 S. B. 477 - 4 -