Georgia Law Reduces Tax Rate
On April 26, 2022, Governor Kemp of Georgia signed House Bill 137 (the Bill) into law, which included a gradual reduction of the state tax rate as well as an increase in personal tax exemptions. The cost of the bill is expected to be approximately $545 million in the first year to $1 billion in the second year.
The Bill would reduce the Georgia tax rate from 5.75 percent to 4.99 percent over a period of six years, starting with the 2024 tax year and proceeding through 2029. The phase-in would begin with a reduction to 5.49 percent beginning in 2024. The rate cuts will pause in any year of that timeframe that Georgia tax revenues do not grow by at least three percent from the prior year, or if tax revenues are not higher than those of each of the past five years.
Progressive Marginal Tax Rates
Additionally, the Bill eliminates the progressive marginal tax rates and combines the personal exemption and standard deduction into a single larger personal exemption. Itemized deductions would be retained for those who itemized for federal purposes. The increases in the personal tax exemption will be as follows:
• For those filing single returns, the exemption increase is from $2,700 to $12,000.
• For those married filing jointly, the exemption will increase every two years, beginning from $18,500 in 2024 and progressing to $24,000 by 2030.
It is important to note that the tax rate reduction does not apply to corporate tax rates.
For questions or more information for how the new legislation affects your tax situation, reach out to your Windham Brannon advisor or contact Tim Clancy.
