Governor Deal Announces Income Tax Cuts
The U.S. Congress passed and President Trump signed into law the largest tax reform plan in a generation. The reforms changed personal and corporate income tax rates, but also increased the standard deductions and altered or eliminated others. As a result, Georgia’s tax code didn’t match the federal tax code as closely (it has never fully matched) and the resulting changes could create a state tax windfall if adjustments are not made.
Today at noon, Governor Nathan Deal (flanked by Speaker David Ralston and Lt Governor Casey Cagle) announced a package of tax cuts that would reduce Georgia’s state income tax to 5.75% for 2019 and provides provisions to further reduce the income tax rate to 5.5% for 2020.
There are quite a few details on what deductions were adopted and not adopted from the Federal Tax code. Consult your tax advisor for those specifics.
Other portions of the bill eliminates the state portion of taxes on jet fuel. It DOES NOT eliminate the local taxes on AV gas, or on jet fuel taxes that were approved and grandfathered prior to the end of 1987. Of note, however, is that the state (cough, Clayton County, cough) is not in full compliance with federal law. The whole Clayton County PR stunt over this deserves, even demands, its own post.
In short, tax reform at the federal level combined with a rainy day fund passing 10% of annual state revenue has presented an opportunity for income tax reform at the state level. Presuming this bill becomes law (and the presence and positive remarks by Speaker Ralston & Lt Gov Cagle indicate that it will), the legacy of Governor Deal and the legislature of the past 8 years will include funding education first, providing for increased transportation infrastructure investment, completing transformative criminal justice reform, filling an empty rainy day fund, AND cutting income tax rates.
That’s a pretty stellar record. One that will look pretty good in November for any candidate that hasn’t tried to stake the future of their career running against it.
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Charlie
Founder of GeorgiaPol.com; Now weekly columnist Very interested in Georgia and Georginas. Interest in politics is waning daily.
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Lt. Governor Casey Cagle, the leading conservative Republican candidate for governor, today joined Gov. Nathan Deal and Speaker David Ralston to announce a historic tax cut for hard-working Georgians.
“By cutting income tax rates, we are delivering on a goal that my fellow conservatives have long sought,” said Cagle. “Conservative spending policy allows for conservative tax policy, and I’m extremely proud that Georgia families will keep more of the money they earn to save for their futures and to provide for their needs. This plan builds on the tax cut we passed through the Senate last year and sets us apart as a bold leader in taking full advantage of the Trump tax reform to increase incomes across Georgia.”
The significant tax cut will be equal to greater than $5.7 billion over the next five years, and will represent an individual income tax cut that is more than $1 billion greater than the projected “windfall” from the federal Tax Cuts and Jobs Act. This tax cut will be the first cut of Georgia’s income tax rate in state history.
“Our conservative leadership is driving Georgia’s incomes higher and producing results for all our communities. As governor, I will lead to advance the next wave of cuts to continue lowering our total tax burden and helping more families get ahead and climb the economic ladder.”
Under the five-year plan unveiled today, the standard deduction is doubled from $2,300 to $4,600 for individual filers and from $3,000 to $6,000 for married joint filers. The top rate will be reduced from 6 percent to 5.75 percent in FY2019 and down to 5.50 percent in FY2020.
Joseph Hendricks
Are the proposed rate reductions revenue neutral to the State?
Does anybody really think for a second that the state tax burden has ever been an impediment to climbing an economic ladder?
I remember when HOPE was heading towards insolvency, the USG budget was slashed, we had to raise the gas tax and enact some goofy hotel tax to fund basic infrastructure and now we are talking state tax cuts? What about rural health care funding?
I don’t understand this. Increase the rainy day fund if anything, the State pretty much went through that quickly during the last downturn. How is USG funding with respect to the losses it sustained?
Oh wait, this is an gubernatorial election year. I get it now!
The Conservative bible leaves out the line, “render unto Caesar”.