Legislative Update: Georgia’s 2024 Session Ends & Tennessee Offers Unique Refund Opportunity

At a glance

• The main takeaway: Georgia’s 2024 legislative session included the passage of several notable income tax changes, and Tennessee’s franchise tax reform provides taxpayers with a unique refund opportunity.
• Assess the impact: It’s important to stay up-to-date on state tax law changes and how to determine your eligibility to secure valuable tax refunds. 
• Take the next step: Aprio’s State and Local Tax (SALT) team can navigate you through the notable tax bills passed and help you claim refunds where applicable.

Schedule a free consultation today to learn more!

The full story:

It’s been a busy spring for Georgia and Tennessee. On March 28, 2024, the Georgia legislative session ended and saw the passage of several notable tax bills. Plus, Tennessee’s franchise tax reform has resulted in a refund opportunity taxpayers won’t want to miss.

Read on for highlights on the four income tax changes in Georgia and to determine your eligibility for Tennessee’s refund.

Georgia

1. IRC Conformity (HB 1162 – signed 4/22/24) – Georgia’s annual Internal Revenue Code (IRC) conformity has been updated to January 1, 2024, for tax years beginning on or after January 1, 2023. There are no new decoupling provisions with this update and all existing decoupling provisions remain in effect.  
2. Accelerated Reduction of Individual Income Tax Rate (HB 1015 – signed 4/18/24) – Last year, the state passed legislation that, beginning with the 2024 tax year, lowered the state income tax rate to 5.49%, instituted a flat tax, and then scheduled a .10% rate reduction in successive tax years until the rate reached 4.99% (provided certain budgetary requirements were met). The current legislation drops the rate in 2024 from 5.49% to 5.39%, essentially accelerating the scheduled rate reduction plan by one year.
3. Conforming Entity Rate to Individual Rate and Extending Time for Corporate Filing (HB 1023 – signed 4/18/24) – For tax years beginning in 2024, the rate imposed on C corporations as well as on S corporations and partnerships that elect PTE will match the applicable individual tax rate in effect for that tax year. In addition, for tax years beginning in 2025, the legislation allows corporate taxpayers to file their Georgia returns no later than one month following the federal extended due date if a federal extension has been granted.
4. Credit Carryforward Period Reductions (HB 1181 – signed 5/6/24) – For tax credits generated during taxable years beginning on or after January 1, 2025, many of the credit carryforward periods have been reduced. For example, research and development (R&D), jobs, and investment tax credits, the 10-year carryforward period has been reduced to five years. For film and gaming, SSO, education donation, and other donation-related tax credits, the five-year carryforward period has been reduced to three years. Where applicable, the ability to sell credits or utilize them against withholding is not affected. Tax credits generated in prior years may still use the longer carryforward period.

It’s important to note that while the bills summarized in (2) and (3) apply for tax years beginning on or after January 1, 2024, their effective dates are July 1, 2024. Therefore, estimated payments due before July 1, 2024, should be calculated as if these amendments are not yet in effect, and then a true-up can occur for subsequent payments.

Tennessee Franchise Tax Refund Opportunity

On April 25, 2024, the Tennessee House and Senate reached an agreement and passed legislation reforming the state’s franchise and excise tax (HB1893/SB2013), and offering refunds to thousands of taxpayers. By way of brief background, the franchise tax portion of the franchise and excise tax requires taxpayers to pay tax on the greater of two tax bases: (i) apportioned net worth and (ii) the value of real and tangible property physically located in the state. 

Due to concerns over the constitutionality of the property value base (including pending legal challenges initiated by taxpayers), the legislature agreed to remove the property value base from the tax calculation and offer refunds to taxpayers based on the difference between what they paid under the property value base versus what their tax liability would have been under the apportioned net worth base. The refunds are subject to the following conditions:

• Refunds are available for taxes reported to the state on a return filed on or after January 1, 2021, covering a tax period ending on or after March 31, 2020.
• Refund claims must be filed between May 15, 2024, and November 30, 2024.
• The identify of taxpayers that received refunds will be made public on the Tennessee Department of Revenue’s website from May 31, 2025, through June 30, 2025. Taxpayers will be divided into three groups based on the total amount of refund received as follows: (i) $750 or less, (ii) more than $750 and up to $10,000, and (iii) more than $10,000.
• Taxpayer must waive their right to sue the state over the constitutionality of the prior franchise tax.

The bottom line

The Tennessee Department of Revenue issued Notice #24-05, summarizing the legislation and detailing the refund procedure. Please reach out to a member of the Aprio SALT team or your Aprio tax advisor for assistance with claiming these refunds. 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.