SALT Corner: Georgia State Tax Updates
There are several notable updates to be aware of and watch in Georgia. First, the legislative session will close out at the end of March, with several major tax bills likely to pass. Second, developments on local occupation taxes (particularly in the City of Atlanta) pose both opportunities and burdens for taxpayers. And finally, Georgia’s new Tax Court will begin operations July 1, 2026.
Georgia Legislative Updates
The Georgia legislature convenes for 40 legislative days each calendar year. The last day of this legislative session is April 2, 2026. Although the final passage of legislation is uncertain till then, generally only bills that have been passed by one legislative chamber as of last Friday, March 6, are still active for final passage.
This legislative term, there are numerous tax proposals still kicking, which may ultimately become law. There are several bills that would significantly overhaul the state’s tax structure. One proposal would eliminate all Georgia personal income taxes by 2032, while repealing many corporate income tax credits and sales tax exemptions.[1] Meanwhile, another proposal would decrease income taxes by decreasing the tax rate and increasing the standard deduction.[2] Another proposal that would have eliminated property taxes on homesteads failed to pass.[3] Instead, the Georgia House passed the “Homeownership Opportunity and Market Equalization Act of 2026” that would limit increases of local operating budgets (that lead to property tax increases), caps local sales tax rates, and provides for a constitutional referendum in November 2026 on whether to eliminate homestead property taxes.[4] Regardless of which version of these bills ultimately pass, there is likely to be significant implications for individual Georgia taxpayers’ state and local tax liabilities.
One bill that must pass is the annual IRC conformity bill, which enumerates provisions of federal tax law Georgia does not follow. Georgia generally follows all federal provisions with express modifications.[5] With the major federal tax changes effective for the 2025 tax year, Georgia must decide if there are additional changes or modifications. Although there could still be some changes to the current legislation, as passed the House, decouples from, among other things, the exclusions for taxing tips and overtime, the interest deduction on auto loans (under IRC § 163(h)(4), the post-2017 changes to R&D costs (under IRC § 174), the real property deduction (under IRC § 179).[6]
The legislature also considered several bills about data centers. The Senate passed a bill to eliminate the certification of any new data centers able to receive incentives under existing legislation.[7] However, existing and certified data centers would continue to receive the sales tax exemption until the existing incentive expires in 2031. In 2024, the Governor vetoed similar legislation after both chambers of the legislature passed it. Although the Georgia Senate eyed eliminating or limiting tax credits and incentives, the Georgia House passed a bill that would allow forestry manufacturers to sell their unused job credits.[8] The vast majority of Georgia income tax credits are not sellable—with the notable exception of the film tax credit. If passed, this legislation may provide a new market for taxpayers seeking income tax credits.
Atlanta Occupation Taxes
Georgia authorizes municipalities and counties to impose a gross receipts tax on business located within their jurisdiction. While local governments may administer these taxes, they are constrained by state law as to how these taxes operate. One key statue is O.C.G.A. § 48-13-14, which dictates how to allocate the amount of a multi-state taxpayers’ Georgia gross receipts that a local jurisdiction can tax. In City of Atlanta v. Block, the City of Atlanta took the position that because the taxpayer only has one office in Georgia (in Atlanta), Atlanta can tax all Georgia receipts, regardless of the Atlanta office’s connection to generating those receipts.[9] The Georgia Court of Appeals rejected the City’s argument, finding that the statute is unambiguous and provides two alternative means of apportionment: either a reasonable method or by dividing the Georgia gross receipts by the number of offices (in any state) that contributed to generating those receipts. The latter formula applied to Block.
In January, the Georgia Supreme Court declined to review the Court of Appeals decision, meaning it becomes the law. Accordingly, multi-state taxpayers should confirm that they are appropriately allocating gross receipts to local jurisdictions in accordance with the formula. Taxpayers may also have the opportunity for refund claims for past years. Last year, Atlanta amended its tax rates to gradually increase rates and also raise the cap on gross receipts that are subject to occupations tax. Thus, the materiality of this tax will grow.
Georgia Tax Court
Beginning July 1, 2026, Georgia’s new judicial branch tax court will begin operations. The Tax Court will replace the existing administrative branch Tax Tribunal. The specialized tax court will leverage many advantages of the Tax Tribunal, but has three key benefits: 1) broader civil jurisdiction; 2) streamlined appeals; and 3) judicial independence.
- The Tax Court will be able to hear all matters that arise from a tax dispute that a Georgia Superior Court could. Significantly, it can decide constitutional questions and declaratory judgments.
- Appeals from the Tax Court are directly to the Court of Appeals (or Georgia Supreme Court, if appropriate), without application but “as of right.” Appeals from the Tax Tribunal have to go to the Fulton County Superior Court, and then require an application to the appellate court. This process can be very long and unnecessarily complex.
- Unlike the Tax Tribunal which is part of the Executive Branch, the Tax Court will be part of the Judicial Branch and separated from the Department of Revenue (which is also in the Executive Branch).
Last July, Governor Kemp appointed Frank O’Connell to serve as the first Georgia Tax Court Chief Judge. Beginning April 1, he will be setting up the new court to begin operations in July. The Tax Court will be adopting new procedural rules, with the advice of the Atlanta Bar’s Tax Section. While the new court will have some differences, many of the procedural rules (such as the automatic remand and informal discovery) will likely continue. Under the Tax Court law, all cases that are pending at the Georgia Tax Tribunal will automatically transfer to the Tax Court. The Tax Court offers Georgia taxpayers an efficient and specialized judicial court for resolving tax disputes and to get guidance on tax laws.
Footnotes:
[3] HR 1114
[4] HB 1116
[5] See O.C.G.A. § 48-1-2(14).
[6] HB 1199
[7] SB 410
[8] HB 1085
[9] City of Atlanta v. Block, Inc. of Delaware, 375 Ga. App. 717 (2025), cert. denied (Jan. 21, 2026).
Picture Credit: “File:House Chamber, Georgia State Capitol, Atlanta 20160718 1.jpg” by DXR is licensed under CC BY-SA 4.0.
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