Bill Could Grant Over $ 250 Million In Tax Relief To Georgians And Exempt PPP Loans From State Tax | Georgia
(The Center Square) – Georgia House has introduced a bill that could save taxpayers over $ 250 million if it becomes law and exempt certain loans from the Federal Paycheck Protection Program (PPP ).
The measure, House Bill 265, update the state revenue code annually to expand tax deductions for medical expenses, charitable contributions, and business meals.
The House passed the measure unanimously on Tuesday, and it is now heading to the Senate for consideration.
One of the bill’s sponsors, Rep. David Knight, R-Griffin, said local accountants and tax preparers are waiting for the bill’s changes to report their income taxes for 2020.
“Our Georgian taxpayers are already starting to file their tax returns, and, you know, part of that is the state return,” Griffin said. “They follow these rules or laws that go all the way to tax software.”
Most of the bill’s provisions were drafted to comply with tax relief measures provided by the federal government through coronavirus relief legislation. Lawmakers have said the measure could cost the state nearly $ 255 million in tax revenue over the next five years. Georgians could keep around $ 49 million in tax revenue in FY2021 and $ 82 million in FY2022.
The PPP was launched in March through the CARES Act (Coronavirus Aid, Relief, and Economic Security Act). The program provides loans to businesses to keep their workforce employed and to cover expenses such as rent and payroll during the pandemic. The last round of aid was made available in January.
More than 18,000 companies in Georgia have been approved for PPP financing in the first round of loans, according to data from the US Small Business Administration. Under SB 265, businesses eligible for PPP loan cancellation would not be required to pay state taxes on the loans, even if they count as income. The measure also allows these business owners to claim tax deductions on loans.
The biggest savings for taxpayers could come from deductions for medical expenses. The measure would permanently reduce the deductible floor to 7.5% of a taxpayer’s adjusted gross income after it was raised under the Tax Cuts and Employment Act of 2017. Officials at the Georgia Ministry of Revenue (GDOR) said it could cost the state $ 62 million in tax revenue. over the next five years.
SB 265 would also increase the cap on low-income housing tax credits in the 2021 tax year and make business meals 100% deductible until 2021. The provisions would cost state $ 45 million and $ 51 million in taxes, respectively.
The measure would also allow Georgians who do not claim their charitable contributions as individual positions to claim a standard tax credit of $ 300 until 2021. Lawmakers first approved the threshold in June. SB 265 also allows Georgians to donate 100% of their income to charity in the 2020 and 2021 tax years.
“I guess the point is for a lot of people to go through a rough time now, so just to encourage charitable giving,” said John Foster, deputy director of GDOR’s Legal Affairs and Tax Policy unit.
SB 265 would extend the tax exemption on certain foreclosure debts and allow film production companies to receive credits for the first $ 15 million of production expenses until 2025. It would also exclude certain employers from paying off student loans. in the 2020 tax year.