Georgia’s income tax conformity bill, HB 265, unanimously passed the state House on February 9, 2021, and is now pending the Senate’s review. Georgia’s conformity to the federal Internal Revenue Code (IRC) is updated annually to adopt the most recent federal tax law changes. As such, HB 265 seeks to conform Georgia’s tax code to the IRC as of January 1, 2021 for taxable years beginning on or after January 1, 2020 with no further decoupling from existing Georgia law. By conforming to the Consolidated Appropriations Act, 2021, dated December 21, 2020, the legislation would resolve any uncertainty as to whether the expenses paid with forgiven Paycheck Protection Program loans would be deductible for Georgia income tax purposes.
In 2018, Georgia’s conformity bill adopted provisions reducing the state’s highest marginal rate from 6.00% to 5.75% for 2019, and provided for further reduction to 5.50% in 2020 upon approval by the General Assembly and the Governor. However, due to the upheaval caused by COVID-19 in the prior legislative session, the General Assembly did not take up implementing further rate reductions for 2020 and after. While the current conformity bill (HB 265) does not include any rate reductions, it remains to be seen if other legislative proposals may reduce tax rates or provide other tax relief.