ATLANTA — It’s almost 2025 and that means there are several new laws taking effect as soon as the calendar turns over.
For Georgia taxpayers, there are plenty of new rules and regulations to look at when it comes to income tax, property taxes and even a new tax court.
There’s also a new law that will let the state Department of Audits and Accounts take a closer look at some of the state’s tax benefits to see how they’re performing compared to what they were intended to do.
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Here’s a closer look at some of the tax laws that are taking effect, come Wednesday with Jan. 1, 2025.
HB 581
House Bill 581 passed during the legislative session in April.
Under the new law, “A BILL to be entitled an Act to amend Code Section 28-5-41.1 of the Official Code of Georgia Annotated, relating to economic analysis of certain tax benefits of law or proposed law, and analysis on performance and outcomes of Code Section 33-1-25, so as to revise the deadlines, selection criteria, and required contents for certain annual economic analyses conducted by the Department of Audits and Accounts; to provide for an effective date; to repeal conflicting laws; and for other purposes.”
The bill also removed estimates of current taxes based on the previous year’s millage rates, or how property taxes are calculated.
Additionally, local sales tax limits are capped at 2%, though there are three options that can go around that limit, including transportation penny costs for TSPLOST or MARTA, ESPLOST penny costs for education and a single additional OLOST, CSPLOST, MOST or FLOST, which is new according to the Georgia Municipal Association and provides flexibility for sales taxes in different jurisdictions.
While that’s a lot of acronyms, here’s what they mean:
- TSPLOST: Transportation Special Purpose Local Option Sales Tax
- ESPLOST: Education Special Purpose Local Option Sales Tax
- OLOST: Other Local Option Sales Tax
- CSPLOST: Coliseum Special Purpose Local Option Sales Tax
- MOST: Municipal Option Sales Tax
- FLOST: Floating Local Option Sales Tax
The bill also allows municipalities to opt out of certain homestead exemptions but it must be done by March.
Plus, the value of a homestead, where you actively reside, will not be increased more than the inflation rate each year and it creates a new option for local sales taxes, which would act as a supplement the collection of property taxes.
Even though voters approved the amendment, local municipalities are still able to opt-out of the exemption, but must vote to do so by March 2025.
The municipalities and local government officials the amendment is focused on include county commissions, consolidated government officials, elected city leaders like council members or mayors if they have the power to change tax rates and Board of Education members.
Creating a tax court
After voters approved it during the November general election, the Georgia Tax Court will be created for tax-related court cases. Under the law, the Georgia Tax Court will be in the judicial branch and replaces the Georgia Tax Tribunal, which is currently part of the executive branch.
The Georgia Tax Court would rule on cases involving tax disputes between businesses and the Georgia Department of Revenue. Currently, all appeals go through the Fulton County Superior Court, which is not an appellant court.
Like the current Georgia Tax Tribunal, judges for the Georgia Tax Court would be appointed by the Governor. Their appointments would be subject to approval by majority votes in the Georgia Senate Judiciary Committee and the Georgia House Committee on Judiciary.
Property Tax Exemption cap is higher
Georgia property owners are getting more wiggle room in 20125 when it comes to filing exemptions on their property taxes.
Starting Wednesday, the value limit for property tax exemptions is increasing to $20,000 from $7,500.
According to the legislative text for the item, “All tangible personal property of a taxpayer, except motor vehicles, trailers, and mobile homes, shall be exempt from all ad valorem taxation if the actual fair market value of the total amount of taxable tangible personal property owned by the taxpayer,” up to $20,000.
Lawmakers wrote in the bill that it was intended to ensure “the payment of ad valorem taxation certain tangible personal property on which the tax due does not exceed the reasonable cost of administering and collecting the tax.”
Changes to income tax carryforward periods
Starting Wednesday, Georgia taxpayers will have some limits on carryforward income tax credits.
That means in 2025, options for declaring a net operating loss from one year to another will have restrictions. A carryforward usually lets taxpayers use a loss from one year to offset income in another, future, time period.
Under the new law for income carryforwards, unused credits from related provisions will have a three-year liability use cap, meaning you can’t use a loss as a tax credit to reduce your bill more than three years after it happens.
There are certain exceptions to this rule, such as for “excise tax on wine, exemption of certain insurance companies from taxes, definitions, exemption from taxation, allocation and disbursement of proceeds collected by tag agents, fair market value of vehicle appealable, and report relative to alternative ad valorem tax on motor vehicles, state sales and use tax exemptions, and excise tax imposed, rates for tobacco and vaping products, exemptions, collection and payment, and tax separately identified, respectively, so as to provide for sunset dates; to provide for related matters; to provide for an effective date and applicability; to repeal conflicting laws; and for other purposes,” according to the legislative summary.
Tax Transparency
Lawmakers passed a bill to allow for more transparency when it comes to taxation in Georgia.
The law, Senate Bill 366, requires that state legislators must be given time to read appropriations bills, at least 24 hours after a substitute or amendment is introduced.
Additionally, budget reports from the governor’s office must be made available to each chamber and must include:
- List of all then-existing revenue sources
- Net revenue expected from each source for appropriation in the fiscal year
- Summary of tax expenses including expenditure items, descriptions, projected revenue forgone due to cost and statutory or legal authority for the expense
The Department of Audits and Accounts must also complete at least 12 economic analyses on any income tax credit or sales and use tax exemptions that will sunset or be repealed by law within two years of that calendar’s July 1 date, when economic analyses are to be made for costs of $20 million in their most recent expense reviews.
The audits must be posted publicly available on the Department’s website each year and the information must also be shared with independent auditors for analysis.
Analyses for this legislative provision must include consideration of the provision’s success in meeting its purpose, a good faith estimate for five years of changes to net state revenue, state expenditures and economic activity, a comparison to other states with similar provisions, an assessment about how changes or termination of the Georgia incentives would impact the economy and how other related impacts could be seen through change or removal of the tax incentives.
The analysis must also include recommendations to improve Georgia’s return on investment for any tax incentives provided.
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