22 HB 1437/AP H. B. 1437 - 1 - House Bill 1437 (AS PASSED HOUSE AND SENATE) By: Representatives Blackmon of the 146th, Jones of the 47th, McDonald of the 26th, England of the 116th, Williamson of the 115th, and others A BILL TO BE ENTITLED AN ACT To amend Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to 1 income taxes, so as to revise the rates of taxation on income; to phase in such tax rate 2 reductions over a period of time subject to certain annual determinations; to require the 3 determination and reporting of certain information; to revise personal exemptions; to revise 4 itemized deductions; to amend Title 28 of the Official Code of Georgia Annotated, relating 5 to the General Assembly, so as to create the 2023 Special Council on Tax Reform and 6 Fairness for Georgians and the Special Joint Committee on Georgia Revenue Structure; to 7 state legislative findings and intent; to amend an Act approved March 2, 2018 (Ga. L. 2018, 8 p. 8), which reduced the highest personal and corporate income tax rates, so as to repeal 9 certain contingent provisions; to revise certain effective dates and applicability; to make 10 conforming changes; to provide for related matters; to provide for a short title; to provide for 11 effective dates and applicability; to repeal conflicting laws; and for other purposes. 12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA: 13

22 HB 1437/AP H. B. 1437 - 2 - PART I 14 SECTION 1-1. 15 This Act shall be known and may be cited as the "Tax Reduction and Reform Act of 2022." 16 PART II 17 SECTION 2-1. 18 Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to income taxes, 19 is amended by revising Code Section 48-7-20, relating to individual income tax rates, credit 20 for withholding and other payments, and applicability to estates and trusts, as follows: 21 "48-7-20. 22 (a) A tax is imposed upon every resident of this state with respect to the Georgia taxable 23 net income of the taxpayer as defined in Code Section 48-7-27. A tax is imposed upon 24 every nonresident with respect to such nonresident's Georgia taxable net income not 25 otherwise exempted which is received by the taxpayer from services performed, property 26 owned, proceeds of any lottery prize awarded by the Georgia Lottery Corporation, or from 27 business carried on in this state. Except as otherwise provided in this chapter, the tax 28 imposed by this subsection shall be levied, collected, and paid annually. 29 (a.1)(1) On and after January 1, 2024, the tax imposed pursuant to subsection (a) of this 30 Code section shall be at the rates provided in subsection (a.2) of this Code section for 31 each respective tax year; provided, however, that the actual rates for a given year tax year 32 shall be subject to delays as provided in this subsection. 33 (2) Each prospective change in the tax rates that would otherwise occur as provided in 34 paragraphs (2) through (6) of subsection (a.2) of this Code section shall be delayed by 35 one year for each year that any of the following are true as of December 1: 36

22 HB 1437/AP H. B. 1437 - 3 - (A) The Governor's revenue estimate for the succeeding fiscal year is not at least 3 37 percent above the Governor's revenue estimate for the present fiscal year; 38 (B) The prior fiscal year's net revenue collection was not higher than each of the 39 preceding five fiscal years' net tax revenue collection; or 40 (C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not 41 contain a sum that exceeds the amount of the decrease in state revenue projected to 42 occur as a result of the prospective reduction in the tax rates set to occur the following 43 year. 44 (3) The Office of Planning and Budget shall make the determinations necessary to 45 implement the provisions of paragraph (2) of this subsection and shall report its 46 determinations by December 1 of each year to the department, the Speaker of the House 47 of Representatives, the President of the Senate, and the chairpersons of the House 48 Appropriations Committee, the House Ways and Means Committee, the Senate 49 Appropriations Committee, and the Senate Finance Committee. This paragraph shall not 50 be applicable after the final reduction in the rates occurs as provided in paragraph (6) of 51 subsection (a.2) of this Code section. 52 (a.2) Subject to the provisions of subsection (a.1) of this Code section: 53 (1) For tax years beginning on or after January 1, 2024, the tax imposed pursuant to 54 subsection (a) of this Code section shall be levied at the rate of 5.49 percent; 55 (2) For tax years beginning on or after January 1, 2025, the tax imposed pursuant to 56 subsection (a) of this Code section shall be levied at the rate of 5.39 percent; 57 (3) For tax years beginning on or after January 1, 2026, the tax imposed pursuant to 58 subsection (a) of this Code section shall be levied at the rate of 5.29 percent; 59 (4) For tax years beginning on or after January 1, 2027, the tax imposed pursuant to 60 subsection (a) of this Code section shall be levied at the rate of 5.19 percent; 61 (5) For tax years beginning on or after January 1, 2028, the tax imposed pursuant to 62 subsection (a) of this Code section shall be levied at the rate of 5.09 percent; and 63

22 HB 1437/AP H. B. 1437 - 4 - (6) For tax years beginning on or after January 1, 2029, the tax imposed pursuant to 64 subsection (a) of this Code section shall be levied at the rate of 4.99 percent. 65 (b)(1) The tax imposed pursuant to subsection (a) of this Code section shall be computed 66 in accordance with the following tables: Reserved. 67 SINGLE PERSON 68 If Georgia Taxable 69 Net Income Is: 70 The Tax Is: Not over $750.00 . . . . . . . . . . . . . . . . . . . . . . . . 71 1% Over $750.00 but not over $2,250.00 . . . . . . . . . 72 $7.50 plus 2% of amount over $750.00 Over $2,250.00 but not over $3,750.00 . . . . . . . 73

74 $37.50 plus 3% of amount over $2,250.00 Over $3,750.00 but not over $5,250.00 . . . . . . . 75

76 $82.50 plus 4% of amount over $3,750.00 Over $5,250.00 but not over $7,000.00 . . . . . . . 77

78 $142.50 plus 5% of amount over $5,250.00 Over $7,000.00 . . . . . . . . . . . . . . . . . . . . . . . . . . 79

80 $230.00 plus 5.75% of amount over $7,000.00 MARRIED PERSON FILING A SEPARATE RETURN 81 If Georgia Taxable 82 Net Income Is: 83 The Tax Is: Not over $500.00 . . . . . . . . . . . . . . . . . . . . . . . . 84 1% Over $500.00 but not over $1,500.00 . . . . . . . . . 85 $5.00 plus 2% of amount over $500.00

22 HB 1437/AP H. B. 1437 - 5 - Over $1,500.00 but not over $2,500.00 . . . . . . . 86

87 $25.00 plus 3% of amount over $1,500.00 Over $2,500.00 but not over $3,500.00 . . . . . . . 88

89 $55.00 plus 4% of amount over $2,500.00 Over $3,500.00 but not over $5,000.00 . . . . . . . 90

91 $95.00 plus 5% of amount over $3,500.00 Over $5,000.00 . . . . . . . . . . . . . . . . . . . . . . . . . . 92

93 $170.00 plus 5.75% of amount over $5,000.00 HEAD OF HOUSEHOLD AND MARRIED PERSONS 94 FILING A JOINT RETURN 95 If Georgia Taxable 96 Net Income Is: 97 The Tax Is: Not over $1,000.00 . . . . . . . . . . . . . . . . . . . . . . . 98 1% Over $1,000.00 but not over $3,000.00 . . . . . . . 99

100 $10.00 plus 2% of amount over $1,000.00 Over $3,000.00 but not over $5,000.00 . . . . . . . 101

102 $50.00 plus 3% of amount over $3,000.00 Over $5,000.00 but not over $7,000.00 . . . . . . . 103

104 $110.00 plus 4% of amount over $5,000.00 Over $7,000.00 but not over $10,000.00 . . . . . . 105

106 $190.00 plus 5% of amount over $7,000.00 Over $10,000.00 . . . . . . . . . . . . . . . . . . . . . . . . . 107

108 $340.00 plus 5.75% of amount over $10,000.00

22 HB 1437/AP H. B. 1437 - 6 - (2) To facilitate the computation of the tax by those taxpayers whose federal adjusted 109 gross income together with the adjustments set out in Code Section 48-7-27 for use in 110 arriving at Georgia taxable net income is less than $10,000.00, the commissioner may 111 construct tax tables which may be used by the taxpayers at their option. The tax shown 112 to be due by the tables shall be computed on the bases of the standard deduction and the 113 tax rates specified in paragraph (1) of this subsection. Insofar as practicable, the tables 114 shall produce a tax approximately equivalent to the tax imposed by paragraph (1) of this 115 subsection. 116 (c) The amount deducted and withheld by an employer from the wages of an employee 117 pursuant to Article 5 of this chapter, relating to current income tax payments, shall be 118 allowed the employee as a credit against the tax imposed by this Code section. Amounts 119 paid by an individual as estimated tax under Article 5 of this chapter shall constitute 120 payments on account of the tax imposed by this Code section. The amount withheld or 121 paid during any calendar year shall be allowed as a credit or payment for the taxable year 122 beginning in the calendar year in which the amount is withheld or paid. 123 (d) The tax imposed by this Code section applies to the Georgia taxable net income of 124 estates and trusts, which shall be computed in the same manner as in the case of a single 125 individual. The tax shall be computed on the Georgia taxable net income and shall be paid 126 by the fiduciary." 127 SECTION 2-2. 128 Said chapter is further amended by revising subsection (b) of Code Section 48-7-26, relating 129 to personal exemptions from income tax, as follows: 130 "(b)(1) An exemption of $7,400.00 shall be allowed as a deduction in computing Georgia 131 taxable income of a taxpayer and spouse, but only if a joint return is filed. If a taxpayer 132 and spouse file separate returns, $3,700.00 shall be allowed to each person as a deduction 133 in computing Georgia taxable income. 134

22 HB 1437/AP H. B. 1437 - 7 - (2) An exemption of $2,700.00 shall be allowed as a deduction in computing Georgia 135 taxable income for all taxpayers other than taxpayers who qualify for the exemption 136 provided for in paragraph (1) of this subsection. 137 (3) Commencing with the taxable year beginning January 1, 2003, an exemption of 138 $3,000.00 for each dependent of a taxpayer shall be allowed as a deduction in computing 139 Georgia taxable income of the taxpayer. 140 (b) Each taxpayer shall be allowed as a deduction in computing his or her Georgia taxable 141 income a personal exemption in an amount as follows: 142 (1) For each married couple filing a joint return: 143 (A) For taxable years beginning on or after January 1, 2024, $18,500.00; 144 (B) For taxable years beginning on or after January 1, 2026, $20,000.00; 145 (C) For taxable years beginning on or after January 1, 2028, $22,000.00; or 146 (D) For taxable years beginning on or after January 1, 2030, $24,000.00; 147 (2) For each married taxpayer filing a separate return, one-half of the amount of the 148 personal exemption allowed under paragraph (1) of this subsection for the given year; 149 (3) For each single taxpayer or head of household, $12,000.00; and 150 (4) For each dependent of a taxpayer, $3,000.00." 151 SECTION 2-3. 152 Said chapter is further amended in subsection (a) of Code Section 48-7-27, relating to 153 computation of state taxable net income, by adding a new paragraph and revising 154 paragraph (1) and subparagraph (E) of paragraph (5) as follows: 155 "(1) The Either the sum of all itemized nonbusiness deductions used in computing such 156 taxpayer's federal taxable income or, if the taxpayer could not or did not itemize 157 nonbusiness deductions, then a standard deduction as provided for in the following 158 subparagraphs: 159 (A) In the case of a single taxpayer or a head of household, $5,400.00; 160

22 HB 1437/AP H. B. 1437 - 8 - (B) In the case of a married taxpayer filing a separate return, $3,550.00; 161 (C) In the case of a married couple filing a joint return, $7,100.00; 162 (D) An additional deduction of $1,300.00 for the taxpayer if the taxpayer has attained 163 the age of 65 before the close of the taxpayer's taxable year. An additional deduction 164 of $1,300.00 for the spouse of the taxpayer shall be allowed if a joint return is made by 165 the taxpayer and the taxpayer's spouse and the spouse has attained the age of 65 before 166 the close of the taxable year; and 167 (E) An additional deduction of $1,300.00 for the taxpayer if the taxpayer is blind at the 168 close of the taxable year. An additional deduction of $1,300.00 for the spouse of the 169 taxpayer shall be allowed if a joint return is made by the taxpayer and the taxpayer's 170 spouse and the spouse is blind at the close of the taxable year. For the purposes of this 171 subparagraph, the determination of whether the taxpayer or the spouse is blind shall be 172 made at the close of the taxable year except that, if either the taxpayer or the spouse 173 dies during the taxable year, the determination shall be made as of the time of the 174 death;" 175 "(E)(i) For the purposes of this paragraph, retirement income shall include but not be 176 limited to income from military retirement, interest income, dividend income, net 177 income from rental property, capital gains income, income from royalties, income 178 from pensions and annuities, and no more than $4,000.00 $5,000.00 of an individual's 179 earned income. Earned income in excess of $4,000.00 $5,000.00, including but not 180 limited to net business income earned by an individual from any trade or business 181 carried on by such individual, wages, salaries, tips, and other employer compensation, 182 shall not be regarded as retirement income. The receipt of earned income shall not 183 diminish any taxpayer's eligibility for the retirement income exclusions allowed by 184 this paragraph except to the extent of the express limitation provided in this division. 185

22 HB 1437/AP H. B. 1437 - 9 - (ii) Any income received by a surviving family member that is based on the service 186 record of a deceased veteran shall be excluded from Georgia taxable net income 187 without regard to the age of the surviving family member." 188 SECTION 2-4. 189 Said chapter is further amended in said Code section by revising paragraph (3) of subsection 190 (b) as follows: 191 "(3) There shall be added to taxable income any amount income taxes imposed by any 192 tax jurisdiction except the State of Georgia to the extent deducted pursuant to Section 164 193 of the Internal Revenue Code in determining federal taxable income that exceeds the 194 following: 195 (A) For a single taxpayer, a taxpayer filing as head-of-household, or a married taxpayer 196 filing jointly, $10,000.00; or 197 (B) For a married taxpayer filing separately, $5,000.00." 198 PART III 199 SECTION 3-1. 200 Title 28 of the Official Code of Georgia Annotated, relating to the General Assembly, is 201 amended by adding a new chapter to read as follows: 202 "CHAPTER 12 203 28-12-1. 204 On or before May 1, 2023, the House Ways and Means Committee and the Senate 205 Committee on Finance shall jointly undertake a thorough review of any and all state tax 206 credits, deductions, and exemptions. No later than December 1, 2023, said committees 207

22 HB 1437/AP H. B. 1437 - 10 - shall submit a report of their findings and recommendations to the presiding officers of 208 their respective chambers." 209 PART IV 210 SECTION 4-1. 211 An Act approved March 2, 2018 (Ga. L. 2018, p. 8), which reduced the highest personal and 212 corporate income tax rates, is amended by repealing and reserving Sections 1-3 and 1-5 of 213 said Act and by revising Section 3-1 as follows: 214 "SECTION 3-1. 215 (a)(1) Section 1-1 of this Act shall become effective upon the approval of this Act by the 216 Governor or upon this Act becoming law without such approval and such section shall 217 be applicable to all taxable years beginning on or after January 1, 2017; provided, 218 however, that Code Section 48-1-2 as amended by Section 1-1 of this Act shall be 219 amended by revisions contained in Acts approved by the Governor or that became or 220 become law without such approval after March 2, 2018, and became or become 221 applicable to tax years beginning on or after January 1, 2017. 222 (2) Section 1-6 of this Act shall become effective upon the approval of this Act by the 223 Governor or upon this Act becoming law without such approval and such section shall 224 be applicable to all taxable years beginning on or after January 1, 2017; provided, 225 however, that the revisions to Code Section 48-7-21 made by Section 1-6 of this Act shall 226 be subject to the revisions made by Acts approved by the Governor or that became or 227 become law without such approval after March 2, 2018, and became or become 228 applicable to tax years beginning on or after January 1, 2017. 229 (3) Section 1-8 of this Act shall become effective upon the approval of this Act by the 230 Governor or upon this Act becoming law without such approval and such section shall 231

22 HB 1437/AP H. B. 1437 - 11 - be applicable to all taxable years beginning on or after January 1, 2017; provided, 232 however, that the revisions to Code Section 48-7-27 made by Section 1-8 of this Act shall 233 be subject to the revisions made by Acts approved by the Governor or that became or 234 become law without such approval after March 2, 2018, and became or become 235 applicable to tax years beginning on or after January 1, 2017. 236 (b)(1) Section 1-2 of this Act shall become effective upon the approval of this Act by the 237 Governor or upon this Act becoming law without such approval and shall be applicable 238 to all taxable years beginning on January 1, 2019, and ending December 31, 2019; 239 provided, however, that the revisions to Code Section 48-7-20 made by Section 1-2 of 240 this Act shall be subject to the revisions made by Acts approved by the Governor or that 241 became or become law without such approval after March 2, 2018, and became or 242 become applicable to tax years beginning on or after January 1, 2020. 243 (2) Section 1-4 of this Act shall become effective upon the approval of this Act by the 244 Governor or upon this Act becoming law without such approval and shall be applicable 245 to all taxable years beginning on January 1, 2019, and ending December 31, 2019; 246 provided, however, that the revisions to Code Section 48-7-21 made by Section 1-4 of 247 this Act shall be subject to the revisions made by Acts approved by the Governor or that 248 became or become law without such approval after March 2, 2018, and became or 249 become applicable to tax years beginning on or after January 1, 2020. 250 (c) Reserved. 251 (d) Section 1-7 of this Act shall become effective upon the approval of this Act by the 252 Governor or upon this Act becoming law without such approval and shall be applicable to 253 all taxable years beginning on January 1, 2018, and ending December 31, 2019; provided, 254 however, that the revisions to Code Section 48-7-27 made by Section 1-7 of this Act shall 255 be subject to the revisions made by Acts approved by the Governor or that became or 256 become law without such approval after March 2, 2018, and became or become applicable 257 to tax years beginning on or after January 1, 2020. 258

22 HB 1437/AP H. B. 1437 - 12 - (e) Section 1-9 of this Act shall become effective upon the approval of this Act by the 259 Governor or upon this Act becoming law without such approval; provided, however, that: 260 (1) The revisions to subsection (c) of Code Section 48-7-42 contained in Section 1-9 of 261 this Act shall be applicable to tax credits that are assigned in taxable years beginning on 262 or after January 1, 2018; provided, however, that such revisions shall be subject to the 263 revisions made by Acts approved by the Governor or that became or become law without 264 such approval after March 2, 2018, and became or become applicable to tax years 265 beginning on or after January 1, 2018; and 266 (2) The revisions to subsection (g) of Code Section 48-7-42 contained in Section 1-9 of 267 this Act shall be applicable to sales, mergers, acquisitions, or bankruptcies occurring in 268 taxable years beginning on or after January 1, 2018; provided, however, that such 269 revisions shall be subject to the revisions made by Acts approved by the Governor or that 270 became or become law without such approval after March 2, 2018, and became or 271 become applicable to tax years beginning on or after January 1, 2018. 272 (f) Part II of this Act shall become effective July 1, 2018; provided, however, that the 273 revisions to Code Section 48-5C-1 made by Part II of this Act shall be subject to the 274 revisions made by Acts approved by the Governor or that became or become law without 275 such approval after March 2, 2018. 276 (g) Part III of this Act shall become effective upon its approval by the Governor or upon 277 becoming law without such approval; provided, however, that Part III of this Act shall be 278 subject to the revisions made by Acts approved by the Governor or that became or become 279 law without such approval after March 2, 2018." 280

22 HB 1437/AP H. B. 1437 - 13 - PART V 281 SECTION 5-1. 282 (a) This Act shall become effective upon the approval of this Act by the Governor or upon 283 this Act becoming law without such approval; provided, however, that Part II of this Act 284 shall become effective on January 1, 2024, and shall be applicable to all taxable years 285 beginning on or after January 1, 2024. 286 (b) Tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not 287 be affected by the passage of this Act and shall continue to be governed by the provisions of 288 Title 48 of the Official Code of Georgia Annotated as they existed for such prior taxable 289 years. 290 SECTION 5-2. 291 All laws and parts of laws in conflict with this Act are repealed. 292