SB520: SB520 State Income Tax Rates; revise; Code Section 20-2A-4; repeal and reserve

26 LC 44 3458 Senate Bill 520 By: Senators Jackson of the 41st, Jones II of the 22nd, Parent of the 44th, Halpern of the 39th, Orrock of the 36th and others 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 imposition, rate, computation, exemptions, and cred its relative to state income2 taxes, so as to revise income tax rates; to repeal itemized nonbusiness deductions and revise3 standard deductions; to revise the child tax credit; to provide for an earned income credit; to4 repeal tax credits for contributions to student scholarship org anizations; to amend Code5 Section 48-11-2 of the Official Code of Georgia Annotated, relating to excise tax imposed,6 rates for tobacco and vaping products, exemptions, collection a nd payment, and tax7 separately identified, so as to revise tax rates for cigars, lo ose or smokeless tobacco,8 consumable vapor products, vapor devices, and cigarettes; to amend Chapter 2A of Title 209 of the Official Code of Georgia Annotated, relating to student scholarship organizations, so10 as to repeal and reserve Code Section 20-2A-4, relating to list of student scholarship11 organizations to be provided to the General Assembly; to repeal a p e n a l t y r e g a r d i n g12 noncompliance by student scholarship organizations; to provide for effective dates and13 automatic repeals; to provide for conforming changes; to provide for definitions; to provide14 for related matters; to provide for an effective date and appli cability; to repeal conflicting15 laws; and for other purposes.16 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:17 S. B. 520 - 1 - 26 LC 44 3458 SECTION 1.18 Article 2 of Chapter 7 of Title 48 of the Official Code of Geor gia Annotated, relating to19 imposition, rate, computation, exemptions, and credits relative to state income taxes, is20 amended in Code Section 48-7-20, relating to individual tax rates, credit for withholding and21 other payments, and applicability to estates and trusts, by rev ising subsection (a.1) as22 follows:23 "(a.1)(1) On and after January 1, 2025 2027, the tax imposed pursuant to subsection (a) of24 this Code section shall be 5.19 percent for taxable years begin ning on or after25 January 1, 2025; provided, however, that such rate shall be red uced by 0.10 percent26 annually beginning on January 1, 2026, until the rate reaches 4.99 percent, provided that27 such annual reductions in the tax rate shall be subject to delays as provided in paragraph28 (2) of this subsection.29 (2) Each prospective annual reduction in the tax rate that wou ld otherwise occur as30 provided in paragraph (1) of this subsection shall be delayed by one year for each year31 that any of the following are true as of December 1:32 (A) The Governor's revenue estimate for the succeeding fiscal year is not at least 333 percent above the Governor's revenue estimate for the present fiscal year;34 (B) The prior fiscal year's net revenue collection was not hig her than each of the35 preceding three fiscal years' net tax revenue collection; or36 (C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not37 contain a sum that exceeds the amount of the decrease in state revenue projected to38 occur as a result of the prospective reduction in the tax rates set to occur the following39 year.40 (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 o41 implement the provisions of paragraph (2) of this subsection an d shall report its42 determinations by December 1 of each year to the department, the Speaker of the House43 of Representatives, the President of the Senate, and the chairp ersons of the House44 S. B. 520 - 2 - 26 LC 44 3458 Appropriations Committee, the House Ways and Means Committee, t he Senate45 Appropriations Committee, and the Senate Finance Committee. This paragraph shall not46 be applicable after the final reduction to the rate of 4.99 percent occurs:47 (1) In the case of a married couple filing a joint return:48 (A) With a Georgia taxable net income of up to $30,000.00, 2 percent for taxable years49 beginning on or after January 1, 2027;50 (B) With a Georgia taxable n et income of m ore than $30,000.00 and less than51 $60,000.00, 4 percent for taxable years beginning on or after January 1, 2027; and52 (C) With a Georgia taxable net income of $60,000.00 or more, 6 percent for taxable53 years beginning on or after January 1, 2027; and54 (2) In the case of a single taxpayer, head of household, or ma rried taxpayer filing a55 separate return:56 (A) With a Georgia taxable net income of up to $15,000.00, 2 percent for taxable years57 beginning on or after January 1, 2027;58 (B) With a Georgia taxable net income of more than $15,000.00 and less than59 $30,000.00, 4 percent for taxable years beginning on or after January 1, 2027; and60 (C) With a Georgia taxable net income of $30,000.00 or more, 6 percent for taxable61 years beginning on or after January 1, 2027."62 SECTION 2.63 Said article is further amended in Code Section 48-7-21, relating to taxation of corporations,64 by revising subsection (a) and division (b)(7)(C)(iii) as follows:65 "(a) Every domestic corporation and every foreign corporation s hall pay annually an66 income tax on its Georgia taxable net income at the same rate o f the tax im posed on67 individuals under subsection (a.1) of Code Section 48-7-20 rate of 6 percent f o r t h e68 corresponding taxable year. Georgia taxable net income of a co rporation shall be the69 corporation's taxable income from property owned or from business done in this state. A70 S. B. 520 - 3 - 26 LC 44 3458 corporation's taxable income from property owned or from business done in this state shall71 consist of the corporation's taxable income as defined in the I nternal Revenue Code of72 1986, with the adjustments provided for in subsection (b) of this Code section and allocated73 and apportioned as provided in Code Section 48-7-31."74 "(iii) No electing Subchapter 'S' corporation nor any of its sh areholders shall be75 entitled to any credit under Code Section 48-7-28 with respect to such tax so paid or76 any deduction for such income under subsection (d) of Code Sect ion 48-7-27;77 provided, however, that such electing Subchapter 'S' corporation shall otherwise be78 eligible for credits provided by this chapter and shall be considered an 'other entity'79 for purposes of Code Sections 48-7-29.16, 48-7-29.20, and 48-7-29.21."80 SECTION 3.81 Said article is further amended in Code Section 48-7-23, relating to taxation of partnerships,82 by revising paragraph (4) of subsection (b) as follows:83 "(4) No electing partnership nor any of its partners shall be entitled to any credit under84 Code Section 48-7-28 with respect to such tax so paid or any deduction for such income85 under subsection (d) of Code Section 48-7-27; provided, however , that such electing86 partnership shall otherwise be eligible for credits provided by this chapter and shall be87 considered an 'other entity' for purposes of Code Sections 48-7 -29.16, 48-7-29.20, and88 48-7-29.21."89 SECTION 4.90 Said article is further amended in Code Section 48-7-27, relating to computation of taxable91 net income, by revising the introductory language and paragraph (1) of subsection (a) as92 follows:93 "(a) Georgia taxable net income of an individual shall be the taxpayer's federal adjusted94 gross income, as defined in the United States Internal Revenue Code of 1986, less:95 S. B. 520 - 4 - 26 LC 44 3458 (1) At the taxpayer's election, either:96 (A) The sum of all itemized nonbusiness deductions used in computing such taxpayer's97 federal taxable income; or98 (B)(1) A standard deduction in an amount as follows:99 (i)(A) In the case of a married couple filing a joint return, $24,000.00 $34,000.00; or100 (ii)(B) In the case of a single taxpayer, head of household, or married taxpayer filing101 a separate return, $12,000.00 $17,000.00; and102 (C) Provided, however, that, in the case of:103 (i) A married couple filing a joint return with a federal adju sted gross income of104 $280,000.00 or more, such standard deduction shall be reduced a nnually by an105 amount equal to 25 percent of the amount by which the taxpayer' s federal adjusted106 gross income for the current taxable year exceeds $280,000.00; and107 (ii) A single taxpayer, head of household, or married taxpayer filing a separate return108 with a federal adjusted gross income of $140,000.00 or more, such standard deduction109 shall be reduced annually by an amount equal to 25 percent of the amount by which110 the taxpayer's federal adjusted gross income for the current ta xable year exceeds111 $140,000.00;"112 SECTION 5.113 Said article is further amended by repealing and reserving Code Section 48-7-29.16, relating114 to tax credits for contributions to student scholarship organizations.115 SECTION 6.116 Said article is further amended in Code Section 48-7-29.27, rel ating to tax credits for117 qualifying child, by revising subsection (b) as follows:118 S. B. 520 - 5 - 26 LC 44 3458 "(b)(1) For taxable years beginning on or after January 1, 2026, a ta xpayer shall be119 allowed a credit against the tax imposed by Code Section 48-7-20 in an amount equal to120 $250.00 $1,250.00 for each qualifying child of the taxpayer.121 (2) If the total amount of the tax credit provided for in this subsection exceeds the122 taxpayer's income tax liability for a taxable year, such excess funds shall be refunded to123 the taxpayer."124 SECTION 7.125 Said article is further amended by adding a new Code section to read as follows:126 "48-7-29.29.127 (a) A taxpayer shall be allowed a credit against the tax imposed by Code Section 48-7-20128 in an amount equal to 20 percent of the federal credit that such taxpayer is allowed under129 Section 32 of the Internal Revenue Code. Such credit shall be allowed only if the130 individual would have received the federal credit allowed under Section 32 of the Internal131 Revenue Code after adding any carryforward of a net operating l oss that was deducted132 pursuant to such section in determining eligibility for the federal credit.133 (b) If the total amount of the tax credit provided for in this Code section exceeds the134 taxpayer's income tax liability for a taxable year, such excess funds shall be refunded to the135 taxpayer.136 (c) The commissioner shall be authorized to promulgate rules and regulations necessary137 to implement and administer the provisions of this Code section."138 SECTION 8.139 Code Section 48-11-2 of the Official Code of Georgia Annotated, relating to excise tax140 imposed, rates for tobacco and vaping products, exemptions, collection and payment, and tax141 separately identified, is amended by revising subsection (a) as follows:142 S. B. 520 - 6 - 26 LC 44 3458 "(a) An excise tax, in addition to all other taxes of every kind imposed by law, is imposed143 upon the sale, receipt, purchase, possession, consumption, handling, distribution, or use of144 cigars, cigarettes, loose or smokeless tobacco, alternative nic otine products, and vapor145 products in this state at the following rates:146 (1) Little cigars: two and one-half mills each; Cigars, loose or smokeless tobacco,147 consumable vapor products, and vapor devices that contain any c onsumable vapor148 product at the time of sale and which are not designed or intended to be reused or refilled:149 28 percent of the wholesale cost price, exclusive of any trade, cash, or other discounts or150 any promotion, advertising, display, or similar allowances; and151 (2)(A) All cigars other than little cigars: 23 percent of the wholes ale cost price,152 exclusive of any trade, cash, or other discounts or any promotion, advertising, display,153 or similar allowances;154 (3) Cigarettes: 37¢ $1.96 per pack of 20 cigarettes and a like rate, pro rata, for other155 size packages; provided, however, that such tax rate shall be revised annually by being156 multiplied by the inflation rate for the prior year.157 (B) For the purposes of this paragraph, the term 'inflation ra te' means the annual158 inflationary index rate as determined for a given year by the c ommissioner by159 promulgating a standardized method for determining annual infla tionary index rates160 which reflect the effects of inflation and deflation on the cost of living for residents of161 this state for a given calendar year. Such method may utilize the Consumer Price Index162 as reported by the Bureau of Labor Statistics of the United States Department of Labor163 or any other similar index established by the federal government if the commissioner164 determines that such federal index fairly reflects the effects of inflation and deflation165 on residents of this state.166 (4) Loose or smokeless tobacco: 10 percent of the wholesale cost price, exclusive of any167 trade, cash, or other discounts or any promotion, advertising, display, or similar168 allowances;169 S. B. 520 - 7 - 26 LC 44 3458 (5) Consumable vapor products in a closed system: 5¢ per fluid milliliter;170 (6) Consumable vapor products in an open system: 7 percent of the wholesale cost price,171 exclusive of any trade, cash, or other discounts or any promoti on, advertising, display,172 or similar allowances; and173 (7) Vapor devices that contain any consumable vapor product at the time of sale and174 which are not designed or intended to be reused or refilled: 7 percent of the wholesale175 cost price, exclusive of any trade, cash, or other discounts or any promotion, advertising,176 display, or similar allowances."177 SECTION 9.178 Chapter 2A of Title 20 of the Official Code of Georgia Annotate d, relating to student179 scholarship organizations, is amended by repealing and reservin g Code Section 20-2A-4,180 relating to list of student scholarship organizations to be provided to the General Assembly.181 SECTION 10.182 Said chapter is further amended in Code Section 20-2A-7, relating to penalties for failure to183 comply with requirements of chapter and violations, by revising paragraph (2) of subsection184 (a) as follows:185 "(2) Upon failure to correct all deficiencies within 90 days, su ch student scholarship186 organization shall:187 (A) Be immediately removed from the Department of Education li st provided for in188 Code Section 20-2A-6; and189 (B) Be required to cease all operations as a student scholarsh ip organization and190 transfer all scholarship account funds to a properly operating student scholarship191 organization within 30 calendar days of receipt of notice from the Department of192 Revenue of removal from the approved list; and193 S. B. 520 - 8 - 26 LC 44 3458 (C) Have all applications for preapproval of tax credits under Code Section 48-7-29.16194 rejected by the Department of Revenue on or after the date the Department of195 Education removes the student scholarship organization from its list provided for in196 Code Section 20-2A-6."197 SECTION 11.198 This Act shall become effective on July 1, 2026, and shall be a pplicable to taxable years199 beginning on or after January 1, 2026.200 SECTION 12.201 All laws and parts of laws in conflict with this Act are repealed.202 S. B. 520 - 9 -