Legislative Tax Updates that New York and Georgia Taxpayers Should Know
September 4, 2021
By: Jeff Glickman, SALT Partner
At a glance
- The main takeaway: The latest legislation in New York provides pass-through entities with one last chance to make a pass-through entity tax election for 2022, and the Georgia legislature enacted several notable tax bills.
- Assess the impact: If you’re a pass-through entity in New York, you now have until September 15, 2022 to consider making a pass-through entity tax election for 2022. Georgia taxpayers should take note of recent tax changes and how they can impact you.
- Take the next step: Aprio’s State and Local Tax (SALT) Team understands the challenges of complying with tax laws and can help you navigate these changes.
Schedule a free consultation today to learn more!
The full story:
Below is a summary of recent legislation that was enacted in New York and Georgia.
New York gives PTEs another bite at the apple for 2022
Did your pass-through entity not make an election – which was due by March 15, 2022 – to pay New York State PTE tax for 2022? Perhaps there was not enough information to analyze whether making a PTE tax election was the right move within the first 75 days of the tax year. Well, legislation signed by New York State Governor, Kathy Hochul, on May 6, 2022 extends the date to make the PTE tax election for 2022 until September 15, 2022.
If a PTE makes the election after March 15, 2022, and on or before June 15, 2022, an estimated payment equal to 25% of the required annual payment must be made with the election. If a PTE makes the election after June 15, 2022, and on or before September 15, 2022, an estimated payment equal to 50% of the required annual payment must be made with the election. Elections will not be valid without the required payment.
PTEs and their tax advisors now have more time to consider the impact of making this election.
Georgia legislative session ends with several notable tax bills
Amendments to High Technology Sales Tax Exemption – HB 1291
- Extends the sunset date for this exemption to December 31, 2028 (was June 30, 2023).
- For purposes of calculating the $15 million threshold to qualify for the exemption, taxpayers may only count taxable purchases of computer hardware and software, and specifically excludes prewritten computer software (regardless of delivery method) and computers and/or devices issued to employees.
- Beginning January 1, 2024, taxpayers claiming this exemption will be required to pay 10% of the taxes on the first $15 million in eligible purchases for which the exemption is claimed.
Income Tax Reform – HB 1437 (These are applicable to tax years beginning on or after January 1, 2024)
- Phases in a reduction of personal income tax rates from the current 5.75% to 4.99% by January 1, 2029. The first reduction begins in 2024 when the rate drops to 5.49%, at which time the progressive marginal rates are eliminated, and the income tax rate becomes flat. There are a few caveats worth noting about the rate reductions: (1) they are contingent on the state meeting certain thresholds for revenue and prior year tax collections; (2) they do not apply to corporate income taxes; and (3) they do not apply to PTE taxes.
- A SALT cap is instituted such that itemized filers are limited to $10,000 of itemized deduction for state taxes ($5,000 for married taxpayers filing separately).
- The old personal exemption and standard deduction amounts are combined into one larger personal exemption amount that begins at $18,500 for married taxpayers filing jointly and reaches $24,000 for tax years beginning on or after January 1, 2030. Married taxpayers filing separately will be entitled to one-half that amount, whereas single taxpayers and heads of households will be entitled to $12,000 (no phase-in). For each dependent, a taxpayer may add $3,000.
Internal Revenue Code Conformity – HB 1320
- For tax years beginning on or after January 1, 2021, the bill updates the state’s Internal Revenue Code conformity date to January 1, 2022. This means that unless otherwise stated, when Georgia refers to a term that is not defined in the state code, it has the same meaning as defined in the Internal Revenue Code taking into account any federal amendments enacted on or before January 1, 2022. Please keep in mind that Georgia does not conform to many changes made to the Internal Revenue Code, which can be identified in O.C.G.A. § 48-1-2(14) as well as this webpage on the Georgia Department of Revenue website.
Elective Consolidation – HB 1058
- For tax years beginning on or after January 1, 2023, members of a qualifying “Georgia affiliated group” may elect to file on a consolidated basis instead of having to apply for advance approval.
- An election is made on an originally-filed return, including applicable extensions, and it is binding for 5 years, at which point a new election would need to be made.
- This legislation does not change the calculation of income tax liability on a consolidated return.
- If a group is currently filing a Georgia consolidated return under the prior law, it will have the option to continue to do so under the previous criteria or terminate its consolidated filing status after the period covered by the last consolidated return that is due.
Income Tax Refund – HB 1302
- Georgia taxpayers who were full year residents in 2020 and 2021, and who filed tax returns for both years will receive a refund from the state of up to $500 for married taxpayers filing jointly, $375 for head of household filers, and $250 for single filers and married taxpayers that file separately. Part-year and nonresidents may qualify as well but will receive a prorated amount. For more information, visit the Department’s Tax Refund webpage.
The bottom line
If you have any questions or would like to discuss how these changes impact you, please contact Aprio’s SALT team today. We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.
 New York Senate Bill S8948 (2021-2022 Legislative Session).
Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.
About the Author
Jeff Glickman is the partner-in-charge of Aprio, LLP’s State and Local Tax (SALT) practice. He has over 18 years of SALT consulting experience, advising domestic and international companies in all industries on minimizing their multistate liabilities and risks. He puts cash back into his clients’ businesses by identifying their eligibility for and assisting them in claiming various tax credits, including jobs/investment, retraining, and film/entertainment tax credits. Jeff also maintains a multistate administrative tax dispute and negotiations practice, including obtaining private letter rulings, preparing and negotiating voluntary disclosure agreements, pursuing refund claims, and assisting clients during audits.