Georgia State Tax
Georgia State Tax: An Overview
Georgia is one of the 50 states located in the southeastern United States of America. It has a diverse economy that is known to be one of the fastest-growing in the country. Georgia is home to large corporations such as Coca-Cola, Home Depot, Delta Air Lines, and UPS, which have put the state on the map for their regional and national presence. The state’s tax policy and structure play a significant role in creating a favorable business environment and drawing in companies that seek to establish operations in the area.
In this article, we will provide an overview of Georgia’s tax policy and structure. We will delve into the different types of taxes that the state imposes, how taxes are calculated, and how the tax revenue is utilized to fund various state programs and services.
Types of Taxes
Georgia imposes various types of taxes on its residents, businesses, and non-profit organizations. In general, taxes can be divided into two categories: state and local. State taxes are imposed by the Georgia Department of Revenue, whereas local taxes are imposed by local tax jurisdictions such as cities, counties, and school districts.
Here are the different types of taxes that Georgia imposes:
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1. Individual Income Tax
Georgia imposes a state income tax on its residents. The state uses a graduated income tax system, which means that the tax rate increases as the taxable income increases. The current tax rates for Georgia are as follows:
• 1% on the first $1,000 of taxable income
• 2% on taxable income between $1,001 and $3,000
• 3% on taxable income between $3,001 and $7,000
• 4% on taxable income between $7,001 and $10,000
• 5% on taxable income between $10,001 and $ income over $7,000
• 6% on taxable income between $ Income over $21,000
2. Corporate Income Tax
Georgia imposes a state corporate income tax on businesses that operate in the state. The current corporate income tax rate is 5.75% of net income. However, there is a maximum corporate income tax of $5,000 for businesses that have less than $100,000 in net income. The corporate income tax is based on the net income of the business, which is the income earned after all expenses have been deducted from the gross income.
3. Sales and Use Tax
The state of Georgia imposes a sales and use tax on the sale of tangible personal property and certain services. The current sales tax rate is 4%, and individual counties and municipalities may impose an additional sales and use tax up to 4%. Therefore, a consumer in Georgia may pay up to 8% in sales tax on a purchase, depending on the location of the transaction. The use tax is imposed on purchases made outside the state for use within the state.
4. Property Tax
Georgia imposes a property tax on real estate and personal property. The property tax is assessed by the county or municipality where the property is located. The property tax rate varies by county, with the average rate being 0.859%. The property tax revenue is used to fund local services such as education, public safety, and infrastructure.
5. Estate Tax
Georgia does not impose an estate or inheritance tax on estates of decedents who died after December 31, 2012.
6. Excise Taxes
Georgia imposes excise taxes on certain goods and services, such as alcoholic beverages, tobacco, and motor fuels. The excise tax on cigarettes is $0.37 per pack of 20 cigarettes. The excise tax on beer is $0.26 per gallon, and the excise tax on wine is $0.30 per gallon. The excise tax on motor fuels is $0.28 per gallon.
Calculating Taxes
Calculating taxes in Georgia varies by the type of tax and the entity subject to the tax.
1. Individual Income Tax
To calculate individual income tax, taxpayers must first determine their taxable income by subtracting any allowable deductions from their gross income. Then, taxpayers can use the tax rates provided by the state to determine their tax liability, which is the amount the taxpayer owes the state in income taxes.
2. Corporate Income Tax
To calculate corporate income tax, businesses must first determine their net income. Then, they can use the state's corporate income tax rate of 5.75% to calculate their tax liability.
3. Sales and Use Tax
To calculate sales and use tax, businesses must multiply the sales price of the taxable item or service by the sales tax rate provided by the state. Alternately, consumers can also calculate their sales tax liability based on the purchase price of the item or service.
4. Property Tax
The property tax is calculated by multiplying the assessed value of the property by the millage rate for the county or municipality in which the property is located.
Revenue Utilization
The revenue generated from taxes in Georgia is utilized to fund various state programs and services. Here are a few examples:
1. Education
Georgia uses a significant portion of its tax revenue to fund education. The state allocates over 50% of its budget to K-12 education and higher education. The education funds are used to support public schools, colleges, and universities across the state.
2. Healthcare
Georgia’s tax revenue also funds healthcare programs and services. The state provides funding to Medicaid and PeachCare, which are healthcare programs designed to provide medical coverage to low-income families and children who cannot afford private health insurance.
3. Transportation
Georgia’s tax revenue is also used to fund transportation projects across the state. The revenue is used to maintain and improve the state’s transportation systems, including highways, bridges, and public transit projects.
4. Public Safety
Georgia’s tax revenue is utilized to fund public safety programs and services such as law enforcement, emergency management, and the state’s court system.
5. Natural Resources and Environment
Georgia’s tax revenue supports natural resource and environmental protection programs and services. The revenue funds conservation projects, environmental permit reviews, and disaster recovery programs.
Conclusion
In summary, Georgia's tax policy and structure are designed to balance state funding needs with the state's desire to create a favorable business environment. The state offers a range of tax types, such as individual income tax, corporate income tax, sales and use tax, and property tax, which generate revenue used to fund education, healthcare, transportation, public safety, and natural resources and environmental programs and services. Understanding the tax policy and structure in Georgia is crucial for individuals and businesses to be compliant with the state's tax laws and regulations.
Georgia State Tax
There are a number of taxes applicable to the state of Georgia, which includes a state sales tax, income tax, and other taxes.
Georgia state sales tax – 4%, food and drugs exempt. Localities in Georgia are allowed to subject consumers to additional sales tax.
Georgia personal income tax
- Georgia uses a graduated tax system, where income of $0 - $750 is taxed at 1%, $750 – $2,250 is taxed at 2%, with the highest tax bracket paying 6% for any income over $7,000
- Tax returns are due on April 15
- Every county in Georgia requires taxes be paid for property ownership, motor vehicle ownership, real estate transfers, and document recording. The tax rates vary by each county.
Georgia property taxes
- Fund local governments but approved by state
-Property tax rates are determined by each county individually
-Average property tax is $40 per $1000 assessed property value
Georgia excise taxes
Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.
- Funds health programs and other related activities
-$.50 tax on cigarettes
-$1.01 tax per gallon of liquor
Georgia inheritance tax
Georgia does not have an inheritance tax, but does have an estate tax for decedents' estates with a death date prior to January 1, 2005 which is based on federal estate tax law. It is not paid by the individual inheriting the assets, but rather is paid by the estate before any of the assets are distributed to the heirs. Georgia's estate tax relies on the amount allowable as a credit for state death taxes as shown on the federal estate tax return (Form 706). The amount paid to Georgia is a direct credit against the federal estate tax.
Georgia payroll taxes
State Disability Insurance – none
State Unemployment Insurance - .03% - 7.29%
Exemptions
Certain exemptions for
-Military personnel and veterans
-Persons age 65 and older
-Persons suffering from certain disabilities
There are no child tax credit exemptions, other than requiring a higher income threshold for families with children.
Taxable income
- Wages
- Salaries
- Commissions
- Stock Gains
- Dividends
- Royalties income
- Rental income
- Business income
- Inheritance
- Pensions
- Annuities
- Partnership/shareholder income
- Gain from sale of property
Corporate income tax - 6%
Misc
Georgia allows counties and regions to set individual sales taxes for their area. Therefore, some areas of Georgia have low sales tax of 4% while some areas may have sales tax of as high as 10%
Military members who are legal residents are taxed using federal income tax rules. Any nonresident military members receiving nonmilitary income from a Georgia source must file in the state. For those 62 years or older, up to $15,000 of military retired pay may be excluded and permanently and totally disabled veterans receive the same.
Many county taxes are collected at the end of the calendar year in December.