(The Center Square) – Georgia House has tabled a bill that could save taxpayers more than $ 250 million if required by law and would exempt certain Federal Paycheck Protection Program (PPP) loans from tax.
The measure, House bill 265, Updates the state’s tax code annually to extend tax deductions for medical expenses, charitable donations, and business lunches.
The house unanimously passed the measure on Tuesday and is now going to the Senate for consideration.
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One of the bill’s sponsors, Rep. David Knight, R-Griffin, said local accountants and tax advisors are waiting for bill changes to file income taxes for 2020.
“Our Georgia taxpayers are already starting to file their tax returns, and part of that is the state tax return,” Griffin said. “They obey these rules or laws that go into the tax software.”
Most of the provisions of the bill have been worded to match the tax relief measures granted by the federal government under coronavirus relief legislation. Lawmakers said the move could cost the state nearly $ 255 million in tax revenue over the next five years. Georgians could generate tax revenue of roughly $ 49 million in fiscal 2021 and $ 82 million in fiscal 2022.
The PPP was launched in March by the Coronavirus Aid, Aid and Economic Security Act (CARES). The program gives loans to companies to keep their workforce busy and cover expenses such as rent and payroll during the pandemic. The last round of assistance was made available in January.
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According to the US Small Business Administration, more than 18,000 Georgia companies were approved for PPP funding in the first round of loans. According to SB 265, companies that are eligible for PPP loans would not have to pay state taxes on the loans even though they are considered income. This measure also allows these business owners to claim tax deductions on the loans.
The greatest savings for taxpayers could be achieved by deducting medical expenses. The measure would permanently lower the deductible to 7.5% of a taxpayer’s adjusted gross income after it was raised under the Tax Reduction and Employment Act 2017. Georgia Department of Revenue (GDOR) officials 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 residential property tax credits in tax year 2021, making business meals 100% tax deductible through 2021. The provision would cost the state $ 45 million or $ 51 million in tax dollars.
The move would also allow Georgians who do not claim their charity contributions as individual line items to claim a standard tax credit of $ 300 by 2021. The legislator first approved the threshold in June. With SB 265, Georgians can donate 100% of their income to charity in the 2020 and 2021 tax years.
“I suspect the purpose is to make it difficult for many people now to just go to charity,” said John Foster, deputy director of GDOR’s legal and tax policy department.
SB 265 would extend the tax exemption on certain foreclosure debts and allow film production companies to obtain credit for the first $ 15 million in production costs through 2025. It would also exclude certain employers from paying back student loans in the 2020 tax year.