Individual income tax deductions have been increased and some tax credits have been extended for Georgia residents. The changes take place starting with the 2022 tax year.
A bill signed on Monday, March 22, 2020, by Governor Brian Kemp (H.B. 593 and H.B. 114):
- Raises the standard deduction. For individuals and heads of household, the amount increases to $5,400 from $4,600 and for married couples it’s raised to $7,100 from $6,000. This move will put a little extra money in the pocket of Georgians that file using the standard deduction.
- Provides additional deductions. Both blind individuals and taxpayers over the age of 65 by the end of the taxable year are granted an additional $1,300 deduction – providing some additional dollars to assist the more vulnerable people in our state.
- Increases the annual tax credit for adoption. For the first five years after adopting a foster child, individuals will see their tax credit triple to $6,000 per child. This increased credit is a great benefit for those who make a foster child(ren) part of their family.
The increased deductions and tax credits will decrease state revenue by $141 million a year, according to a fiscal analysis. Kemp believes these tax savings are needed for businesses and individuals still struggling as a result of COVID-19.
There were concerns by some lawmakers that a change of this magnitude would negatively impact federal funding. While the American Rescue Plan, which marked over $4.65 billion of federal aid for Georgia, prevents states from using their relief funds to cut taxes, the U.S. Treasury Department announced last week that states can still make cuts if they use their own funds.
Please contact Tim Clancy, state and local tax practice leader, at 678.510.2804 or tclancy@windhambrannon.com for more information this or any other state and local tax matter.
