2023 Georgia Tax Law Changes

The 2023 filing season for Georgia state income taxes officially began on February 1. While returns are being accepted for last year, there are several new tax credit programs in effect for 2023 and beyond. In addition to updates for the standard deduction and online sellers, new tax credits are available for donations supporting various programs. This includes the Qualified Law Enforcement Donation Credit, Qualified Foster Child Donation Credit, and the Georgia Heart Hospital Program. The introduction of the new state tax credits opens the door to additional saving opportunities for Atlanta families and businesses. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

General Tax Updates for 2023

The standard deduction increased to $5,400 for single filers and heads of household, $3,550 for married filing separately, and $7,100 for joint filers as of January 1, 2023. This increase was reflected in Georgia’s Tax Relief Act of 2021. The higher standard deduction took effect for the 2022 tax year.

In addition, online sellers that make more than $20,000 in annual sales with third-party e-commerce platforms like Amazon or Etsy will need to provide complete contact information. Under SB 332, consumers are entitled to the company’s or individual’s full name, address, phone number, email address, or other online messaging options. The intent is to prevent the sale of counterfeit or stolen goods.

Individuals and families who received refunds last year as part of Georgia’s surplus tax refund may receive a Form 1099-G. While the refund amount is not subject to state income tax, it may be taxed at the federal level.

LESS Crime Act

Under the newly enacted Law Enforcement Strategic Support (LESS) Crime Act, individuals who donate to law enforcement foundations can receive a tax credit on the state income tax return. Tax credits are available from 2023 through 2027.

Single filers and heads of household can donate up to $5,000 per year, and joint filers up to $10,000. Businesses can also donate including pass-through entities can contribute up to $10,000 per year or the amount of state income tax liability, and corporations may contribute up to 75 percent of income tax liability. Taxpayers will be required to notify the local police department of the forthcoming donation and can seek online preapproval once the portal is published.

Eligible foundations must maintain tax-exempt status and support one local law enforcement unit. Foundations must submit a detailed report of contributions and tax credits with the annual Form 990. Detailed records must be kept regarding:

• Individual and corporate contributions, amounts, and tax credits approved.
• A list of qualified expenses

Additionally, foundations will be required to publish the local police unit’s prior year annual budget on its website.

Local police departments or sheriffs can accept up to $3 million in annual donations with a statewide maximum of $75 million per year. Donations can support officer salaries, training, equipment, or community programs that partner with behavioral health workers for mental health emergency calls.

More information about registering as a certified qualified law enforcement foundation will be published soon.

Georgia HEART Hospital Program

Georgia has offered a tax credit for donations to qualified rural hospitals since 2018. The Georgia HEART Hospital Program has awarded $60 million to participating hospitals based on taxpayer donations. It’s a first-come, first-serve credit, and eligible hospitals may accept up to $4 million per year. There are 55 hospitals in the Program.

In 2023 and 2024, the HEART Program tax credit has been increased to $75 million. Hospitals are still only permitted to access up to $4 million – up to $2 million in corporate donations and $2 million in individual donations during the first six months of the year. After that point, if there are any remaining tax credits, hospitals may access more than $2 million of either type of donation up to the $4 million cap.

Tax credit limits are as follows:

• Single filers and married filing separate: $5,000
• Joint filers: $10,000
• Corporations, trusts, and pass-through entities: up to 75 percent of state income tax liability
  • New in 2022: pass-through entities can contribute up to $10,000 – the same amount as corporations – if electing to take the entity-level credit.
• An individual owner of a pass-through entity: $10,000 if paying at an individual level

After June 30, taxpayers can make additional contributions up to the $75 million cap.If the tax credit is more than the taxpayer’s state income tax liability, the credit can be carried forward for up to five years.

Taxpayers must seek online preapproval to claim HEART Program tax credits. Once the application is approved, taxpayers have 180 days to make the contribution.

Fostering Success Act

This new tax credit, worth up to $2,500 for single filers or $5,000 for joint filers and pass-through entities, aims to help young adults who have aged out of the state’s foster care program. Like the above-mentioned tax credits, it is first-come, first-serve and has a cap of $20 million annually. Corporations can contribute up to ten percent of their state income tax liability.

Tax credits can be used to help qualified nonprofits fund expenses for young adults’ college or technical school tuition, and housing, medical, or transportation costs. Nonprofits must first register with the Division of Family and Children Services to accept tax credit donations. Taxpayers must seek preapproval before contributing.

Property Tax Exemption for Timber Equipment

As of January 1, 2023, timber equipment is exempt from ad valorem property taxes. In Georgia, ad valorem taxes are assessed based on the individual’s or entity’s wealth. “Wealth is determined by the property a person owns,” as defined by the state Department of Revenue (DOR). Unless certain property is exempt, it is taxable.

Timber equipment means any owned or leased equipment (other than motor vehicles) used directly to produce or harvest timber, including off-road equipment and related attachments.

Prior to the exemption, timber equipment was taxed at a rate of 40 percent of fair market value. Standing timber is still taxed when it is sold or harvested at a rate equal to 100 percent of its fair market value.

Contact Us

These new state tax credits, and related updates, provide an opportunity for Atlanta taxpayers to realize additional savings on income tax returns. If you have questions about the information outlined above or need assistance with a tax planning or compliance issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.