Kemp signs tax cut, foster care adoption tax credit increase into law
(The Center Square) – Gov. Brian Kemp signed a bill into law Monday that collectively will cut income taxes for individuals by more than $600 million over the next five years.
Dubbed The Tax Relief Act of 2021, House Bill 593, raises the standard deduction on state income tax returns for a single taxpayer by $800 to $5,400 and by $1,100 to $7,100 for a married couple filing a joint return, starting in the 2022 tax year.
“As we return to normal here in the Peach State and look to fully restore our economy, it is critical that Georgians keep as much of their hard-earned money as possible to revive small businesses and industries still struggling under the weight of COVID,” Kemp said Monday during a bill signing ceremony at the state Capitol.
It is the second tax cut of its kind in three years. The Georgia Legislature doubled the state’s standard deduction under the Tax Cuts and Jobs Act in Georgia in 2018.
The state auditor’s office and the budget office said the new law could save taxpayers $58 million in 2022 and more than $140 million each year through 2026, for a total tax cut of $631 million over five years. Some critics said the tax cut could cost the state more in the long run. Others said it could jeopardize tax revenue that could be used for state programs and services.
The Tax Relief Act of 2021 cleared the House unanimously March 3, and the Senate approved the bill, 35-15, on Thursday.
Kemp also signed House Bill 114, which increases the annual tax incentive for adopting a foster child from $2,000 to $6,000 for five years.
Kemp backed the bill, which he said is part of his campaign promise to promote Georgia as “a state that values life.”
The average foster care adoption tax credit issued is $1,945, below the current threshold, lawmakers said. After five years, parents would continue to receive a $2,000 tax credit until the child turns 18 years old. The credit cannot be more than what the taxpayer owes during the tax year. The new law stops any carry-forward of credits.
“This increased tax credit is going to be real. It’s substantial. It’s going to remove barriers and hurdles from families that are just sitting there on the precipice of being able to make the decision to bring on those kids,” said Lt. Gov. Geoff Duncan, who joined Kemp at the Capitol on Monday. “I am also proud to stand here with HB 593, The Tax Relief Act of 2021, with so many great friends and partners in our general assembly, and this is truly a reflection of what it looks like under conservative leadership.”
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