![]() ![]() ![]() As such, HB 265 conforms Georgia’s tax code to the IRC as of Janufor taxable years beginning on or after Januwith no new decoupling from existing Georgia law. The legislation became effective upon the Governor’s signature the same day. On February 24, 2021, the Senate passed the House version of the conformity legislation. HB 265 – Annual IRS conformity legislationĪs a fixed conformity state, the Georgia General Assembly annually passes a conformity bill. ![]() This may impact the utilization of certain Georgia income tax credits, such as the credit for donations to Student Scholarship Organizations made by individual partners and shareholders of qualifying PTEs, pursuant to O.C.G.A. ![]() However, unlike many of the other states’ proposals, this Georgia legislation provides that individuals subtract the PTE income on their individual returns rather than apply a state tax credit for the taxes paid on their behalf by the PTE. In 2020, the IRS issued a notice recognizing the full deductibility of state PTEs’ taxes at the entity level for federal income tax purposes notwithstanding the individual SALT cap. According to the fiscal note, the legislation is intended to have no impact on state revenue.Įversheds Sutherland Observation: This legislation is similar to legislation passed or proposed in numerous states (such as Arkansas, Connecticut, Louisiana, Maryland, Michigan, Minnesota, New Jersey, New York, Oklahoma, Rhode Island, and Wisconsin), to respond to the $10,000 limitation in the 2017 federal Tax Cuts and Jobs Act imposed on individuals’ state and local taxes (SALT) paid deduction. The election would become available for taxable years beginning on or after January 1, 2022. The election is only available to a PTE that is 100% directly owned and controlled by natural persons (rather than companies or other entities). If a PTE makes this election, shareholders and partners of the PTE would not recognize the flow-through income on their individual returns. HB 149 provides that pass-through entities (PTEs) including S-Corporations and Partnerships (including limited liability entities taxed as partnerships) may make an irrevocable election to pay the tax due on income earned by the entity at the entity level at the rate of 5.75%. If the Governor fails to take any action, the legislation will also become law upon the expiration of the 40-day period. Unless indicated as already signed by the Governor, bills passed by both chambers of the General Assembly are transmitted to the Governor, who can sign or veto the legislation within 40 days after the end of the legislative session. Wednesday, Mawas “Sine Die” or the 40th and final legislative day of the 2021 legislative session. During the 2021 legislative session, the Georgia General Assembly passed key legislation, including conformity to the federal tax law, the elimination of deference to subregulatory interpretations of the Department of Revenue, the ability for pass-through entities to elect to pay state income tax at the entity level, temporary ad valorem relief for manufacturers, and significant changes to existing income tax credits and sales tax exemptions. ![]()
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