Georgia expands IRC compliance laws for 2021

Georgia’s Income Tax Compliance Act, HB 265, was passed unanimously by the State House on February 9, 2021 and is now pending. Georgia’s compliance with the federal Internal Revenue Code (IRC) is updated annually to reflect the latest changes to the federal tax law. For this reason, HB 265 is trying to adapt Georgian tax legislation to the IRC from January 1, 2021 for tax years beginning on or after January 1, 2020, without further decoupling from the existing Georgian law. By complying with the Consolidated Appropriations Act of 2021, dated December 21, 2020, the legislation would remove any uncertainty as to whether expenses paid with Paycheck Protection Program loans made would be deductible for income tax purposes in Georgia.

In 2018, provisions were passed in the Georgian Conformity Act to lower the state’s highest limit rate from 6.00% to 5.75% for 2019 and to lower it to 5.50% in 2020 after approval by the General Assembly and the Governor. However, due to the upheavals caused by COVID-19 in the previous legislative period, the General Assembly has not started to implement further rate cuts for 2020 and beyond. While the current Conformity Act (HB 265) does not contain any tax cuts, it remains to be seen whether other legislative proposals can lower tax rates or provide other tax breaks.