Georgia Tax Updates

Georgia Governor, Brian Kemp, signed a bill into law on May 2^nd, 2023 that will impose new sales tax on digital products that are downloaded and kept for use. Some examples of these items include: digital books, photographs, periodicals, newspapers, magazines, video games, audio works and recordings, movies, etc. All sellers of such works will be obligated to collect sales and use tax on their products to Georgia customers beginning on January 1^st, 2024.

On March 3^rd, 2022, Georgia approved a bill to remove restrictions for filing a consolidated corporate return. For tax years beginning on and after January 1, 2023, the previous code that required a preapproval for filing a consolidated corporate tax return will be eliminated. Under the previous tax code, corporations that were affiliated were required to file separately unless given preapproval by the Georgia Department of Revenue. Corporations now have the right to elect filing a consolidated return. This election is irrevocable for five years.

For tax years beginning on or after January 1, 2022, Georgia teachers who teach at qualifying rural or low-performing schools will be allowed a $3,000 tax credit. While this has already been in effect for the previous tax year, this credit is allowed to be taken for up to five consecutive school years. This credit cannot be more than the taxpayer’s current tax liability and cannot be used for previous years’ tax liability. Any credit that is left unused can be carried forward to the following three tax years. The list for qualifying and participating schools has been updated as of May 19^th, 2023. You can find the full list at the Georgia Department of Education website – gadoe.org

Beginning for tax years starting on or after January 1^st, 2022, Georgia has separated itself from the Federal treatment of Research and Experimental expenses that was enacted under IRC Section 174. This now allows Georgia taxpayers to fully expense R&E expenditures in the tax year they were paid or incurred. Previously, under Section 174 R&E expenditures would be capitalized and amortized over five years.

Georgia H.B. 412 expands the eligibility for partnerships and limited liability companies that are taxed as partnerships to enact the PTE election. This will allow the company to be taxed on an entity level for state tax purposes, even if the partnership is composed of corporations, other partnerships, nonresident aliens, or trusts. Previously, only partnerships that were 100% owned by those that could be a shareholder in an S Corporation could make the PTE election. This takes effect for tax years beginning on and after January 1^st, 2023.