Many, many people and families in Georgia will see their federal tax burden decrease as a result of the recently passed tax reform bill, now referred to as the Tax Cuts and Job Act. However, most are not aware that there are unintended consequences of the federal tax reform bill for Georgians: an increase in their state tax burden.
Beginning this year, the federal standard deduction for a family is $24,000. This is an increase from the previous years’ $12,700. I believe there are many families who have traditionally had itemized deduction amounts greater than the previous years’ standard deduction of $12,700 but less than this year’s standard deduction of $24,000. In previous years, these families would have itemized their deductions for their federal tax return, and thus for their state tax return, too, since the current state standard deduction for a family is only $3,000.
However, in the same scenario this year, these families would choose to use the federal standard deduction on their tax returns since it is greater than their itemized deduction amount.
Herein lies the problem when it comes to state tax returns. The current Georgia tax form states if you select to use the standard deduction on your federal tax return, you must use the standard deduction on your state tax return. The state’s standard deduction of $3,000 is much less than the amount these families are accustomed to deducting from their state tax return, somewhere between $12,700 and $24,000.
Assuming that nothing changes in the state tax forms from last year, these families could see their taxable income increase by $9,700 to $21,000, which could result in paying an extra $582 to $1,260 in taxes to the state. Unless the current Georgia tax forms are changed, many Georgia residents will see an increase in their state tax burden.
If the state legislature and governor do nothing, this tax increase would occur without our local government having to vote on the tax increase and without Georgians having any say or input on the matter. I believe no one wants to pay more taxes to the state, especially when there has been no request or apparent need for one.
I suggest readers contact their state representatives and senators to get further information and voice their opinion on this matter.