Georgia Tax Expenditure Report for FY2014 Prepared by the Fiscal Research Center of the Andrew Young School of Policy Studies at Georgia State University December 2012 Funding for this project was provided by the Georgia Department of Audits and Accounts. We would like to thank the Georgia Department of Revenue and the Georgia Office of Insurance and Safety Fire Commissioner for their contributions to the preparation of this report. Lastly, we would like to thank Leslie McGuire and Ed Blaha of the Georgia Department of Audits and Accounts for their comments and recommendations. All estimates presented in this report are the work of the Fiscal Research Center. We are solely responsible for its contents. 1|Page Table of Contents Summary of State Tax Expenditures .......................................................................................................... 10 1. Personal Income Tax............................................................................................................................. 36 1.1 Federal Exclusions ............................................................................................................................ 38 1.2 Federal Deductions ........................................................................................................................... 48 1.3 Special Federal Conformity Provisions ............................................................................................ 55 1.4 Georgia Exemptions.......................................................................................................................... 58 1.5 Georgia Deductions .......................................................................................................................... 62 1.6 Georgia Credits ................................................................................................................................. 63 2. Corporate Income Tax .......................................................................................................................... 69 2.1 Federal Corporate Exclusions ........................................................................................................... 70 2.2 Federal Corporate Deductions .......................................................................................................... 73 2.3 Special Federal Corporate Conformity Provisions ........................................................................... 77 2.4 Corporate Apportionment ................................................................................................................. 80 2.5 Georgia Deductions .......................................................................................................................... 82 2.6 Georgia Credits ................................................................................................................................. 83 3. Corporate Net Worth Tax ..................................................................................................................... 95 4. Sales and Use Tax ................................................................................................................................. 96 4.5 Sales and Use Tax for Services....................................................................................................... 123 4.7 Vendor Compensation .................................................................................................................... 127 4.9 Casual Sales .................................................................................................................................... 127 5. Insurance Premium Tax ........................................................................................................................ 130 6. Motor Fuel Tax ................................................................................................................................... 133 7. Alcoholic Beverage Tax ..................................................................................................................... 135 8. Cigar and Cigarette Excise Tax .......................................................................................................... 137 9. Financial Institutions Special State Occupation Tax .......................................................................... 138 10. Special Assessment of Forest Land Conservation Use Property ...................................................... 139 11. Title Fee for Motor Vehicles............................................................................................................. 140 Appendix of Tables................................................................................................................................... 141 Table 1: Summary of expired and expiring tax expenditures ............................................................... 141 Table 2: Sales and use tax expenditures by type................................................................................... 143 Tables 3-8: Distributional tables of selected provisions ....................................................................... 149 2|Page Introduction Tax expenditures are provisions in the tax code that allow for special treatment of a source of income or a certain type of expense. Such treatment usually results in a reduction in tax liability for the taxpayer. In principle, these tax benefits could be provided by direct appropriation, thus these provisions are referred to as "expenditures". They represent tax revenues that would have been otherwise generated if not for this preferential treatment in the tax code. Like direct government expenditures, tax expenditures are an allocation of government revenue that are intended to achieve a particular policy outcome or generate some activity. The value of a tax expenditure can be thought of as representing the amount of money that would be needed in the budget to provide the same level of financial support in the form of a government grant instead of through the tax code. Tax expenditures are received by businesses and individual taxpayers and are present in all of Georgia's major taxes, including the individual income tax, corporate income tax, and sales tax. Tax expenditures, also referred to as tax preference items, can take several forms. Many are structured as tax credits and deductions, such as the corporate credit for hiring a new worker or the individual deduction for the mortgage interest paid on a primary residence. Other expenditures are in the form of exclusions of income. For example, at the state level, individuals in Georgia are allowed to exclude Social Security income from the calculation of Georgia taxable income. Lastly, some tax expenditures may be provided in the form of reduced rates for selected items in the tax base, such as the partial sales tax exemption for jet fuel. Tax Expenditure Report Preparation of a tax expenditure report is required by Title 45, Chapter 12, Article 4 of the Official Code of Georgia. The purpose of the report is to list all tax expenditures and their value. In this way, these items can be tracked over time in a fashion analogous to a budget of direct governmental expenditures. While direct expenditures for such items as education or transportation are reviewed annually with every budget, it is usually the case that tax expenditures are not subject to such periodic 3|Page review. It is important to monitor the value associated with these provisions as they are a reduction in tax revenue and their presence results in special treatment for some taxpayers relative to others. For example, the state government supports education through direct expenditure programs and through HOPE scholarships but also allows a tax deduction for certain educational expenses borne by the taxpayer or paid by an employer. Both the direct expenditure and the tax expenditure represent an allocation of government resources toward education, but only the direct expenditures are listed in an annual budget and subject to annual review. Leaving tax expenditures out of the annual budgetary review process creates two types of distortions. First, it under-represents the amount of government resources allocated for a given purpose. Second, it incorrectly represents the distribution of the benefits of the government expenditures. The benefits of tax expenditures are usually targeted to higher income taxpayers compared to those associated with direct expenditure programs, so that their absence leads to the conclusion that government resources are targeted toward less affluent taxpayers. In addition, not all tax expenditure programs have a direct budget counterpart, thus without a tax expenditure report, these provisions and their distributional effects escape notice. The presence of tax expenditures are not necessarily bad tax policy. However, not recognizing or monitoring the resources allocated through the tax system is not good fiscal policy. In this regard, it is important to note that this tax expenditure report does not provide any information on how effective the provision may be in terms of fulfilling its purpose. For instance, while the value of the Research and Development (R&D) credit may be reported annually in the tax expenditure report, there is no accompanying analysis to determine the extent to which more research activities have been undertaken due to the presence of the special provision. Identifying Tax Expenditures In most cases, identifying a tax expenditure is straightforward. Tax expenditures are deviations or special exceptions from the generally defined tax base, sometimes referred to as the normal tax base or the reference tax base. However, there may be disagreement as to what constitutes the normal or reference tax base. Even at the federal level, the list of tax expenditure items included by the Administration differs from the list estimated by Congress because each works 4|Page from a different definition of the standard tax base. The appropriate norm against which tax expenditures are defined is somewhat subjective and may, in some cases, be driven by the intent of the policy underlying the legislation. For example, we would not consider the difference between the current top income tax rate of six percent and the tax rate of one percent a tax expenditure. Tax credits and deductions for certain types of activities, such as the jobs tax credit or the lowincome housing credit, are always classified as tax expenditures. This is also the case for items that are taxed at a reduced rate. In addition, specific exclusions from the tax base are, in most cases, considered tax expenditures. Because the Georgia individual and corporate tax systems are both tied to the federal individual and corporate bases, exclusions or deductions at the federal level apply to the state tax base as well. In some cases, Georgia chooses not to conform to federal provisions, such as the Section 199 deduction for domestic production activities. In these cases, we do not include the provision as a tax expenditure. It is also important to note that tax expenditures are not computed for revenue that is due but not collected. There are instances when it is unclear whether a given tax provision should be listed as a tax expenditure. This is because it is unclear what constitutes the general rule and therefore, it is sometimes difficult to determine which provisions are exceptions to that rule. Consider the personal income tax exemption. Individuals are allowed to exclude an amount of income for each taxpayer included on the return but this exemption of income is not considered a tax expenditure by all states. Another example is the provision allowing for the use of a singlefactor apportionment formula in allocating income earned by corporations operating in more than one state. On one hand, because the general rule of the single-factor apportionment formula has been established at the state level, only deviations from that rule would be listed as a tax expenditure. Alternatively, if one considers the status-quo method of apportionment to be the equally weighted three-factor apportionment formula, any deviation from that rule, such as the double-weighted three factor or single-factor apportionment formula, would be reported as a tax expenditure. This sort of problematic classification of tax expenditures also applies to the taxation of services under the state sales tax. Because state legislation refers to the purchase of tangible goods, the exclusion of services from the base may not be seen as a deviation from the general rule. On the other hand, if it is really the intent of the general rule to tax all 5|Page consumption, then the exclusions provided to the consumption of services should be listed as a tax expenditure. In this report we attempt to incorporate as comprehensive a definition as possible. Tax Expenditures vs. Revenue Estimates The estimate associated with a tax expenditure provision does not necessarily represent the revenue that would be gained from the repeal of the enabling legislation. Instead, the cost of the tax expenditure represents the value of the deduction or credit taken via the provision. Although the presence of one provision may interact with the use of another provision, tax expenditures are estimated as independent provisions. For instance, if the federal Research and Experimentation credit were repealed, federal revenues would not increase by the amount of the federal tax expenditure estimate but by a smaller amount. This is because some of the R&D expenditures claimed through the federal Research and Experimentation tax credit would be shifted over to another tax deduction or credit so that the savings to the government would be less than the value of the tax expenditure estimate. In addition, tax expenditure estimates do not incorporate behavioral effects that may occur due to the elimination of a provision. For instance, the tax expenditure estimate associated with the deduction for charitable giving is based on a current level of charitable contributions. If the deduction for charitable contributions were eliminated, the revenue effect presented in the fiscal note would incorporate both the initial value of charitable contributions from the tax expenditure estimate and a timing effect that would result from people speeding up their level of contributions in response to the future loss of the deduction. Thus, tax expenditure estimates can only act as an indication of the revenue effect that would occur if the provision were eliminated or modified. 6|Page Data Sources and Reliability of Estimates To the extent possible, data from the Georgia Department of Revenue (DOR) is used to estimate the expenditures included in this report. Unfortunately, the required information is not always collected or available. When it is not, other data sources, such as information from the U.S. Census Bureau, the U.S. Bureau of Economic Analysis, or the U.S. Bureau of Labor Statistics, are used. Every effort is made to provide reliable, well supported estimates of the provisions. Because of the time lag in processing income tax returns, the most recent data available from the Georgia Department of Revenue is calendar year (CY) 2009. Therefore, even in cases where DOR data is used as the primary data source, the tax expenditures presented in this report are estimates. Two subjective measures of reliability are provided in this report, the estimate reliability and the data reliability. The reliability of both the estimate and data are categorized into three classes, A, B, and C. Class A estimates and data sources are considered the most reliable. Data sources with a Class A status consist of data from the U.S. statistical agencies or from the Georgia Department of Revenue. Estimates with a Class A status are typically those estimates that are based on Class A data that is particularly applicable to the expenditure provision. For instance, most of the state business tax credit expenditures are listed as Class A estimates. They are based on tax credit data provided by the Georgia Department of Revenue that specifically addresses or measures the tax expenditure provision. On the other hand, most sales tax estimates are given a Class B status. While these provisions may be based on Class A data sources, such as the Economic Census or the Consumer Expenditure Survey from the Bureau of Labor Statistics, the data may only be available at a national level, or the data may refer to more activities than is covered by the tax expenditure provision. In these cases, the data must be adjusted to represent the specific activity associated with the expenditure provision and scaled down to represent the value of the activity within Georgia. Because of these adjustments, the estimate is given a Class B status even though it is based on Class A data. Class C estimates are believed to provide reasonable estimates and are based on the best data available. For some items, no reliable information is available. In these cases, no estimate for the expenditure is provided. 7|Page Class of Estimate/Class of Data Class A Class B Class C Description of Estimate Reliability Based on data specifically related to the tax expenditure provision and to Georgia taxpayers Based on national data which has been modified to represent Georgia and the specific tax activity covered by the expenditure Represents best available estimate at this time Examples of Data Sources by Reliability Status Data from Department of Revenue, Bureau of Labor Statistics Consumer Expenditure Survey, Bureau of Economic Analysis, U.S. Census Bureau datasets Industry surveys and trade magazines, most proprietary information Newspaper articles, secondary sources Local Government Effects In addition to the state estimates, this report attempts, where possible, to estimate the effects on local government revenues. There are many state exemptions that have local ramifications, such as numerous exemptions from the sales tax base. The local estimates that are provided represent the aggregate value of the exemptions that would accrue to the counties, municipalities, special service districts, including tax allocation and community improvement districts, and school districts. Consistency with prior estimates This is the third year in which the tax expenditure report has been produced. The report for FY2013 provided estimates for FY2011-FY2013. The current report presents estimates for FY2012-FY2014. In most cases the estimates between the current and past reports are consistent, with the latest report continuing the same trend in the value of the estimates that was established in earlier reports. On the other hand, there are some cases where the estimate presented in the FY2014 report differs significantly from that presented in the past reports. This usually occurs because new information has become available or because a new forecast of economic activity is relied upon to predict future values. The updated estimates are included in 8|Page the current report and any major inconsistency with prior reports is noted in the discussion relating to the expenditure. Outline of the Report The report continues with a summary table containing a title of each tax expenditure provision, the tax base it is associated with, the type of expenditure and the estimated value for FY2012, FY2013, and FY2014 for all tax expenditures identified in the report. Provisions assigned a value of "(m)" denote a tax expenditure that is estimated to reduce state revenues by less than $1 million. Provisions assigned a value of "(-m)" denote a tax expenditure that is estimated to increase state revenues by less than $1 million. Provisions assigned a negative value denote a positive tax expenditure that is estimated to increase state revenues. In addition to an identifying title, each expenditure provision is assigned an expenditure number, the first digit of which corresponds to the different sections of this report, such as 1 for the individual income tax and 5 for the insurance premium tax. The remaining portion of the numeric identifier is used to divide the expenditures into different subcategories such as federal and state expenditures, and deductions and credits. Only in the case of the sales tax exemptions does the expenditure number have any relationship to the state tax code section to which the expenditure item is associated. The numeric identifiers for each provision are consistent across tax expenditure reports and can be used to compare expenditure estimates from one report to the next. Following the summary tables are detailed sections for each of the specific taxes covered in this report. These detailed sections begin with a brief description of the tax, latest figures on revenue collection and any information on recent modifications to the base. These detailed sections also include additional information for each of the expenditure items such as the statute number, the year in which the expenditure provision was enacted and the year in which it became effective, information on the data and estimate reliability and data source, a more detailed description of the tax expenditure provision, and the value of the expenditure provision. The report concludes with an appendix that includes tables listing recently expired provisions, sales and use tax expenditures by type, and distributional analysis for a selected number of provisions. 9|Page Summary of State Tax Expenditures $ in Millions Expenditure Summary Federal Income Tax Provisions1 Tax Type of State FY State FY State FY Expenditure 2012 2013 2014 1.1.001 1.1.002 1.1.003 1.1.004 1.1.005 1.1.006 1.1.007 1.1.008 1.1.009 1.1.010 1.1.011 1.1.012 1.1.013 1.1.014 Exclusion of employee meals and lodging Exclusion of housing allowances for ministers Exclusion of employerprovided child care Exclusion of employee awards Exclusion of employer contributions and earnings to pension plans. (Includes Keoghs, defined benefit and defined contribution plans) Exclusion for employer contributions for health care, health insurance premiums and long-term care insurance premiums Exclusion for employer paid accident and disability premiums Exclusion for employer contributions for premiums on group long term life insurance Exclusion for employerpaid transportation benefits and employer-provided transit and vanpool benefits Exclusion for benefits provided through cafeteria plans Exclusion for employer provided adoption assistance2 Exclusion for employer provided education benefits (including education assistance and tuition reduction benefits) Exclusion of miscellaneous fringe benefits Exclusion of foreign earned income (including housing and salary) Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion 8 8 9 5 5 5 13 10 9 2 2 2 848 994 1,132 831 959 1,073 23 24 25 11 12 13 33 35 36 232 260 286 3 1 (m) 7 7 7 43 44 44 42 43 44 1 These are Internal Revenue Code Provisions (IRC) that has been adopted by Georgia as part of its personal income tax. 2 (m) Refers to a revenue loss of less than $1 million. 10 | P a g e Expenditure 1.1.015 1.1.016 1.1.017 1.1.018 1.1.019 1.1.020 1.1.021 1.1.022 1.1.023 1.1.024 1.1.025 1.1.026 1.1.027 Summary of State Tax Expenditures $ in Millions Summary Tax Exclusion of certain allowances for federal employees abroad Exclusion of benefits and allowances to armed forces personnel (includes expenditure for military disability benefits) Medical care and Tricare Medical Insurance for military dependents and retirees Exclusion for Veterans' Benefits (includes veteran's disability compensation, pensions, and readjustment benefits) Exclusion of income attributable to the discharge of certain student loan debt and NHSC and certain state educational loan repayments Exclusion of Workers' Compensation benefits (includes disability and survivor benefits and medical benefits, and exclusion of damages on account of personal physical injuries or physical sickness) Exclusion for special benefits for disabled coal miners Exclusion of untaxed Social Security and railroad retirement benefits Exclusion of Medicare benefits Exclusion of certain foster care payments Exclusion of cash public assistance benefits Exclusion of scholarship and fellowship income Exclusion for earnings of Coverdell education savings accounts and interest on educational savings bonds Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Type of Expenditure Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion State FY State FY State FY 2012 2013 2014 14 15 16 81 89 96 39 40 41 48 49 49 (m) (m) (m) 69 68 68 (m) (m) (m) 175 199 223 360 405 443 2 2 2 37 43 45 14 15 16 1 1 1 11 | P a g e Expenditure 1.1.028 1.1.029 1.1.030 1.1.031 1.1.032 1.1.033 1.1.034 1.1.035 1.1.036 1.1.037 1.1.038 1.1.039 1.1.040 1.1.041 1.1.042 1.1.043 1.2.001 Summary of State Tax Expenditures $ in Millions Summary Tax Exclusion of earnings of qualified tuition programs (including prepaid tuition programs and savings account programs) Exclusion for certain agricultural cost-sharing payments Exclusion of discharge of indebtedness for certain farmers Exclusion of interest on state and local government private activity bonds Exclusion of capital gains from sale of principle residences Exclusion of capital gains at death Exclusion of capital gains on gifts Exemption from imputed interest rules Exclusion of combat pay Exclusion of energy conservation subsidies provided by public utilities Exclusion from income attributable to the discharge of principal residence acquisition indebtedness Exclusion of gain for certain small business stock Exclusion of interest on public purpose State and local government bonds Exclusion of income earned by voluntary employees' beneficiary associations Exclusion of survivor annuities paid to families of public safety officers killed in the line of duty Exclusion of disaster mitigation payments Accelerated depreciation (MACRS) Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Type of Expenditure Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Deduction State FY State FY State FY 2012 2013 2014 4 5 6 (m) (m) (m) (m) (m) (m) (m) (m) (m) 163 189 204 167 187 225 37 58 28 3 3 3 18 19 20 (m) (m) (m) 5 3 (m) 2 2 3 2 2 2 22 24 26 (m) (m) (m) (m) (m) (m) 46 44 42 12 | P a g e Expenditure 1.2.002 1.2.003 1.2.004 1.2.005 1.2.006 1.2.007 1.2.008 1.2.009 1.2.010 1.2.011 1.2.012 1.2.013 1.2.014 1.2.015 Summary of State Tax Expenditures $ in Millions Summary Tax Deduction for expenditures on energy-efficient commercial building property Deduction of exploration and development costs of nonfuel minerals. (Includes excess of depletion over cost depletion, nonfuel minerals) Amortization of business startup costs Expensing of research and development costs in lieu of R&D tax credit Expensing of magazine circulation expenditures Deductions for oil and gas exploration and development costs Special treatment for expenses related to timber production Expensing under IRC section 179 of depreciable business property3 Exceptions for publicly traded partnership with qualified income derived from certain energy-related activities Treatment of income from exploration and mining as qualified income for publicly traded partnerships Various agricultural expense provisions Community and regional development incentives Expensing to remove architectural and transportation barriers to the handicapped and elderly Inventory methods and valuation, including last in first out, lower of cost or market, specific identification for homogenous products Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Type of Expenditure Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction State FY State FY State FY 2012 2013 2014 1 1 1 (m) (m) (m) 11 10 9 (m) (m) (m) (m) (m) (m) (m) (m) (m) 2 2 2 24 14 -6 1 1 1 1 1 1 (m) (m) (m) (m) (m) (m) (m) (m) (m) 5 5 5 3 Negative values denote a positive tax expenditure that would result in additional revenue to the state budget. 13 | P a g e Expenditure 1.2.017 1.2.018 1.2.019 1.2.020 1.2.021 1.2.022 1.2.023 1.2.024 1.2.025 1.2.026 1.2.027 1.2.028 1.2.029 1.2.030 1.3.001 1.3.002 Summary of State Tax Expenditures $ in Millions Summary Tax Health Savings Accounts Deduction for property taxes on real property Deduction for nonbusiness state and local government income taxes, sales taxes and property taxes Deduction for mortgage interest on owner-occupied residences Deduction for charitable contributions (includes deductions for health, education, and other than health and education) Deduction for casualty and theft losses Deduction for overnight expenses for National Guard and Reserve members Deduction for premiums for qualified mortgage insurance Deduction for interest on student loans Deduction for higher education expenses Deduction for teacher classroom expenses Deduction for health insurance premiums and long-term care insurance premiums by the selfemployed Deduction for medical expenses and long term care expenses Deduction for IRAs, includes traditional IRAs and Roth IRAs. Like-kind exchanges Special rules for magazine, paperback book, and record returns Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Federal Individual Income Tax Type of Expenditure Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deferral Special Rule State FY State FY State FY 2012 2013 2014 7 9 11 94 98 123 215 239 295 531 555 604 352 394 416 3 3 3 1 1 1 1 (m) 0 6 5 3 3 1 0 (m) (m) (m) 21 25 27 69 84 100 60 80 101 3 4 5 (m) (m) (m) 14 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Tax 1.3.003 5 year carryback for net Federal operating losses attributable Individual to farming Income Tax 1.3.004 Special rules for mining Federal reclamation reserves Individual Income Tax 1.3.005 Cash accounting, other than Federal agriculture Individual Income Tax 1.3.006 Deferral of gain on non- Federal dealer installment sales Individual Income Tax 1.3.007 Completed contract rules Federal Individual Income Tax 1.3.008 Special treatment of Federal employee stock ownership Individual plans (ESOPs) Income Tax 1.3.009 Income averaging for Federal farmers and fishermen Individual Income Tax Georgia Individual Income Tax Provisions Type of Expenditure Special Rule Special Rule Special Rule Special Rule Special Rule Deferral Special Rule State FY State FY State FY 2012 2013 2014 1 1 1 (m) (m) (m) 8 8 8 2 10 12 (m) (m) (m) 3 3 3 (m) (m) (m) 1.4.001 1.4.002 1.4.003 1.4.004 1.4.005 1.4.006 1.4.007 1.4.008 1.4.009 1.4.010 Personal Exemption Retirement Income Exclusion of Federally Taxable Social Security Benefits Georgia Higher Education Savings Plan Contributions Interest on U.S. Obligations Certain military income Organ donation expenses Aged 65/Blind Deduction Certain dependent's unearned income Premiums for high deductible health plans State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption 867 937 1,035 603 662 697 129 135 140 3 3 3 7 5 6 Estimate not available at this time (m) (m) (m) 6 6 7 Estimate not available at this time 3 3 7 15 | P a g e Expenditure 1.4.011 1.4.012 1.4.013 1.4.014 1.4.015 1.4.016 1.4.017 1.4.018 1.4.019 1.5.001 1.6.001 1.6.002 1.6.003 1.6.004 1.6.005 Summary of State Tax Expenditures $ in Millions Summary Tax Salaries and wages reduced from Federal taxable income because of the Federal Jobs Tax Credit Individual retirement account, Keogh, SEP and Sub-S plan withdrawals where tax has been paid to Georgia because of the difference between Georgia and Federal law for tax years 1981 through 1986. Depreciation because of differences in Georgia and Federal law during tax years 1981 through 1986. Income from any fund, program or system which is exempted by federal law or treaty. Certain income in which the Sub-S election is not recognized by Georgia or another state in order to avoid double taxation. Adjustment for certain teachers retired from the Teacher's Retirement System of Georgia Amount claimed by certain employers in food and beverage establishments Adjustment of certain payments to minority subcontractors Adjustments to federal AGI for certain Georgia resident partners Standard Deduction Rural Physician's Credit Disabled person's home purchase or retrofit credit Driver Education Credit Disaster Assistance Credit Qualified Caregiving Expense Credit State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax Type of Expenditure Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Deduction Credit Credit Credit Credit Credit State FY State FY State FY 2012 2013 2014 Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time 174 176 178 1 1 1 (m) (m) (m) 1 1 1 (m) (m) (m) (m) (m) (m) 16 | P a g e Expenditure 1.6.006 1.6.007 1.6.008 1.6.009 1.6.010 1.6.012 1.6.013 1.6.014 1.6.015 1.6.016 1.6.017 1.6.018 1.6.019 1.6.020 1.6.021 1.6.022 1.6.023 1.6.024 Summary of State Tax Expenditures $ in Millions Summary Tax Tax credit for Life Insurance for Georgia National Guard and Air National Guard Child and Dependent Care Credit Adoption of Foster Child Credit Low-Income Credit Credit for taxes paid to another state Employer's Jobs Tax Credit Quality Jobs Tax Credit New Facilities Jobs Credit New Manufacturing Facilities Property Credit Manufacturer's Investment Tax Credit Optional Investment Tax Credit Port Activity Tax Credit Alternative Port Activity Tax Credit Film Tax Credit Research Tax Credit Seed-Capital Fund Credit Qualified Health Insurance Expense Credit Teleworking Credit (expired 12/31 2011) State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax Type of Expenditure Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit State FY State FY State FY 2012 2013 2014 1 1 1 34 34 35 2 3 4 7 7 7 174 179 185 See 2.6.001 in Corporate Credit Section See 2.6.002 in Corporate Credit Section See 2.6.003 in Corporate Credit Section See 2.6.004 in Corporate Credit Section See 2.6.005 in Corporate Credit Section See 2.6.006 in Corporate Credit Section See 2.6.007 in Corporate Credit Section See 2.6.008 in Corporate Credit Section See 2.6.009 in Corporate Credit Section See 2.6.010 in Corporate Credit Section See 2.6.011 in Corporate Credit Section See 2.6.012 in Corporate Credit Section See 2.6.013 in Corporate Credit Section 17 | P a g e Expenditure 1.6.025 1.6.026 1.6.027 1.6.028 1.6.029 1.6.030 1.6.031 1.6.032 1.6.033 1.6.034 1.6.035 1.6.036 1.6.037 1.6.038 1.6.039 1.6.040 Summary of State Tax Expenditures $ in Millions Summary Tax Qualified Transportation Credit Business Enterprise Vehicle Credit Employer's credit for providing or sponsoring child care for employees and employer's credit for purchasing child care property Low Income Housing Credit Historic Rehabilitation Credit Diesel Particulate Emission Reduction Technology Equipment Credit Low/Zero Emission Vehicle Credit & Electric Vehicle Charger Credit Land Conservation Credit Clean Energy Property and Wood Residuals Credit Employer's Credit for Basic Skills Education Employer's Credit for Approved Employee Retraining Qualified Education Expense Credit Qualified Investor Tax Credit Energy or water efficient equipment credit Tax credit for water conservation facilities and qualified water conservation investment property Tax credit for shift from ground water usage State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax State Individual Income Tax Type of Expenditure Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit State FY State FY State FY 2012 2013 2014 See 2.6.014 in Corporate Credit Section See 2.6.015 in Corporate Credit Section See 2.6.016 in Corporate Credit Section See 2.6.017 in Corporate Credit Section See 2.6.018 in Corporate Credit Section See 2.6.019 in Corporate Credit Section See 2.6.020 in Corporate Credit Section See 2.6.021 in Corporate Credit Section See 2.6.022 in Corporate Credit Section See 2.6.023 in Corporate Credit Section See 2.6.024 in Corporate Credit Section See 2.6.025 in Corporate Credit Section See 2.6.026 in Corporate Credit Section See 2.6.027 in Corporate Credit Section See 2.6.028 in Corporate Credit Section See 2.6.029 in Corporate Credit Section 18 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Tax 1.6.041 Tax credit for existing State business enterprises Individual undergoing qualified Income Tax business expansion Federal Corporate Income Tax Provisions4 Type of Expenditure Credit State FY State FY State FY 2012 2013 2014 See 2.6.030 in Corporate Credit Section 2.1.001 2.1.002 2.1.003 2.1.004 2.1.005 2.1.006 2.1.007 2.1.008 2.1.009 2.1.010 2.2.001 2.2.002 2.2.003 Exemption from imputed interest rules Exclusion of interest on state and local government private activity bonds Exclusion of contributions in aid of construction for water and sewer utilities Exclusion of earnings of certain environmental settlement funds Exclusion for certain agricultural cost-sharing payments Exclusion of gain or loss on sale or exchange for brownfield property Exclusion of health insurance benefits for military retirees and retiree dependents enrolled in Medicare Exclusion of disaster mitigation payments Exclusion of interest on public purpose state and local government bonds Various foreign provisions (Including inventory property sales source rule exception, interest expense allocation, deferral of active income of controlled foreign corporations, deferral of active financing income) Accelerated depreciation (MACRS) Deduction for expenditures on energy-efficient commercial building property Deduction of exploration and development costs of nonfuel minerals Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Exclusion Deduction Deduction Deduction (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) 1 1 (m) (m) (m) (m) (m) (m) (m) 63 58 57 29 30 31 (m) (m) (m) (m) (m) (m) 4 These are IRC provisions that have been adopted by Georgia as part of its corporate income tax. 19 | P a g e Expenditure 2.2.004 2.2.005 2.2.006 2.2.007 2.2.008 2.2.009 2.2.011 2.2.012 2.2.013 2.2.014 2.2.015 2.2.016 2.2.017 2.3.001 2.3.002 2.3.003 Summary of State Tax Expenditures $ in Millions Summary Tax Amortization of business startup costs Expensing of research and development costs in lieu of R&D tax credit Expensing of magazine circulation expenditures Deductions for oil and gas exploration and development costs Special treatment for expenses related to timber production Deduction for charitable contributions (includes deductions for health, education, and other than health and education) Expensing under IRC section 179 of depreciable business property5 Amortization of air pollution control facilities Election to expense 50 percent of qualified property used to refine liquid fuels Various agricultural expensing provisions Community and regional development incentives Expensing to remove architectural and transportation barriers to the handicapped and elderly Inventory methods and valuation Like-kind exchanges Special rules for magazine, paperback book, and record returns 5 year carryback for net operating losses attributable to farming Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Federal Corporate Income Tax Type of Expenditure Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Deduction Exemption Deduction Deferral Special Rule Special Rule State FY State FY State FY 2012 2013 2014 (m) (m) (m) 5 6 7 (m) (m) (m) (m) (m) (m) 3 3 3 12 12 12 2 (m) (-m) 1 1 1 (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) (m) 14 15 15 4 4 5 (m) (m) (m) (m) (m) (m) 5 (-m) Refers to a positive tax expenditure that would result in additional revenue to the state budget of less than $1 million. 20 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Tax 2.3.004 Special rules for mining Federal reclamation reserves Corporate Income Tax 2.3.005 Cash accounting, other than Federal agriculture Corporate Income Tax 2.3.006 Deferral of gain on non- Federal dealer installment sales Corporate Income Tax 2.3.007 Completed contract rules Federal Corporate Income Tax 2.3.008 Special treatment of Federal employee stock ownership Corporate plans (ESOPs) Income Tax 2.3.009 Deferral of capital Federal construction costs of Corporate shipping companies Income Tax Georgia Corporate Income Tax Provisions Type of Expenditure Special Rule Special Rule Special Rule Special Rule Deferral Deferral State FY State FY State FY 2012 2013 2014 (m) (m) (m) (m) (m) (m) 11 15 15 2 3 3 -1 -1 -1 (m) (m) (m) 2.4.001 2.4.002 2.4.003 2.5.001 2.5.002 2.6.001 2.6.002 2.6.003 2.6.004 2.6.005 2.6.006 2.6.007 2.6.008 2.6.009 2.6.010 2.6.011 2.6.012 Single Factor Apportionment Throwback Rule Corporate Receipts Sourcing Interest on obligations of United States Exception to intangible expenses and related interest cost Employer's Job Tax Credit Quality Jobs Tax Credit New Facilities Jobs Credit New Manufacturing Facilities Property Credit Manufacturer's Investment Tax Credit Optional Investment Tax Credit Port Activity Tax Credit Alternative Port Activity Tax Credit Film Tax Credit Research Tax Credit Seed-Capital Fund Credit Qualified Health Insurance Expense Credit Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Apportionment Apportionment Apportionment Deduction Deduction Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Estimate not available at this time See page 80 Estimate not available at this time Estimate not available at this time Estimate not available at this time 39 44 48 3 4 5 Included in 2.6.001 Estimate not available at this time 7 8 9 1 1 1 7 7 7 Included in 2.6.007 65 75 86 8 10 13 (m) (m) (m) (m) (m) (m) 21 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Tax 2.6.013 2.6.014 2.6.015 2.6.016 2.6.017 2.6.018 2.6.019 2.6.020 2.6.021 Teleworking Credit (expired 12/31/2011) Qualified Transportation Credit Business Enterprise Vehicle Credit Employer's Credit for providing or sponsoring child care for employees and employer's credit for purchasing child care property Low Income Housing Credit Historic Rehabilitation Credit Diesel Particulate Emission Reduction Technology Equipment Credit Zero and Low Emission Vehicle Credit; Electric Vehicle Charger Credit Land Conservation Credit 2.6.022 Clean Energy Property & Wood Residuals Credit 2.6.023 Employer's Credit for Basic Skills Education 2.6.024 Employer's Credit for Approved Employee Retraining 2.6.025 Qualified Education Expense Credit 2.6.026 Qualified Investor's Tax Credit 2.6.027 Energy or Water Efficient Equipment Credit 2.6.028 Tax credit for water conservation facilities and qualified water conservation investment property 2.6.029 Tax credit for shift from ground-water usage 2.6.030 Tax credit for existing business enterprises undergoing qualified business expansion Net Worth Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Corporate Income Tax Type of Expenditure Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit Credit State FY State FY State FY 2012 2013 2014 1 0 0 (m) (m) (m) (m) (m) (m) 8 9 10 33 36 39 (m) (m) (m) (m) (m) (m) 3 4 4 19 30 34 2 3 3 (m) (m) (m) 19 25 29 51 52 53 0 0 7 0 0 0 Estimate not available at this time Estimate not available at this time Included in 2.6.001 3.001 3.002 Exemption for nonprofit corporations Exemptions from the Net Worth Tax Net Worth Tax Net Worth Tax Exemption Exemption Estimate not available at this time Estimate not available at this time 22 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Sales and Use Tax Tax Type of State FY State FY State FY Expenditure 2012 2013 2014 4.00100 4.00200 4.00300 4.00400 4.00500 4.00600 4.00610 4.00620 4.00630 4.00700 Sales to Federal Government, State of Georgia or a county or municipality in Georgia or any agency of such governments Tangible personal property furnished by the Federal Government or any county or municipality used by a contractor in the installation, repair, or extension of any public water, gas, or sewer system. Federal retailer's excise tax if separately itemized to the consumer and Georgia motor fuel tax imposed on the sale of motor fuel Sales of transportation furnished by a county or municipal public transit system or public transit authorities Sales of transportation furnished by an approved and authorized urban transit system Sales to any Hospital Authority created by Georgia law Sales to any Housing Authority created by Georgia law Sales to local government authorities created on or after January 1, 1980 for the principal purpose of constructing, owning, or operating a coliseum and related facilities Sales to any agricultural commission created by the Department of Agriculture Sales of tangible personal property and services to an approved nursing home, inpatient hospice, general hospital or mental hospital when used specifically in the treatment function. Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Estimate not available at this time Estimate not available at this time 4 4 4 6 6 6 Included in 4.00400 Included in 4.00700 2 2 2 (m) (m) (m) (m) (m) (m) 82 85 87 23 | P a g e Expenditure 4.00710 4.00720 4.00800 4.00900 4.01000 4.01100 4.01200 4.01300 4.01400 4.01500 4.01510 Summary of State Tax Expenditures $ in Millions Summary Sales of tangible personal property and services to a nonprofit organization whose primary function is to provide services to persons with intellectual disabilities. Sales to Georgia Society of the Daughters of the American Revolution Sales of tangible personal property and services to the University System of Georgia and its educational units. Sales of tangible personal property and services used exclusively in the educational function of an approved private college or university located in Georgia whose credits are accepted by the University System of Georgia. Sales of tangible personal property and services used exclusively in the educational function of an approved private elementary or secondary school Sales of tangible personal property or services to, and the purchase of tangible personal property or services by, any educational or cultural institute School lunches sold and served to pupils and employees of public schools School lunches sold and served to pupils and employees of approved private schools Sales of art and other artifacts for display or exhibition to museums Specific fundraising sales by any religious institution lasting no more than 30 days in a calendar year. Sales of pipe organs or steeple bells to any church qualifying as a nonprofit Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 2 2 2 Exemption (m) (m) (m) Exemption 29 30 31 Exemption Estimate not available at this time Exemption 2 2 2 Exemption Estimate not available at this time Exemption 8 8 8 Exemption (m) (m) (m) Exemption (m) (m) (m) Exemption (m) (m) (m) Exemption (m) (m) (m) 24 | P a g e Expenditure 4.01600 4.01700 4.01800 4.01900 4.02000 4.02100 4.02200 4.02300 4.02400 4.02500 Summary of State Tax Expenditures $ in Millions Summary The sale or use of Holy Bibles; testaments, and similar books commonly recognized as being Holy Scripture regardless of by or to whom sold Sales of fuel or consumable supplies used by ships engaged in inter-coastal or foreign commerce Charges for transportation of tangible personal property made in connection with interstate or intrastate transportation All tangible personal property purchased outside this state by a nonresident when the property is brought into Georgia upon the nonresident becoming a resident Water delivered through water mains, lines, or pipes. Sales, transfers or exchanges of tangible personal property resulting from business reorganization when the owners, partners, or stockholders maintain the same proportionate interest or share in the newly formed business Professional, insurance or personal service transactions which involve sales as inconsequential elements for which no separate charge is made Repair services when a separate charge is made to the customer Rental of videotape or film to persons charging admission to view the tape or film Sale of seed, fertilizer, fungicide, and certain other agricultural chemicals to farmers, and feed for livestock, fish, or poultry purchased by persons engaged in animal husbandry (expires January 1, 2013) Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 Estimate not available at this time Exemption Exemption 23 23 23 Estimate not available at this time Exemption Estimate not available at this time Exemption Exemption See expenditure estimate for Residential Utilities (4.5009) Estimate not available at this time Exemption See expenditure estimates for services (4.50003, 4.50010, 4.50011) Exemption Exemption See expenditure estimates for Services (4.50003, 4.50010, 4.50011) Estimate not available at this time Exemption 150 80 0 25 | P a g e Expenditure 4.02600 4.02700 4.02800 4.02900 4.02910 4.03000 4.03100 4.03200 4.03300 4.03310 4.03400 Summary of State Tax Expenditures $ in Millions Summary Sale of machinery used exclusively for irrigation of crops to persons primarily engaged in producing farm crops for sale (expires January 1, 2013) Sales of sugar for use as food to honey bee producers (expires January 1, 2013) Sale of cattle, hogs, sheep, horses, poultry, or bees when sold for breeding purposes (expires January 1, 2013) Sale of certain types of agricultural machinery (expires January 1, 2013) Off-road equipment and related attachments used exclusively in site preparation, planting, cultivating, or harvesting of timber by persons primarily engaged in growing or harvesting timber (expires January 1, 2013) Vehicles purchased by service-connected disabled veterans when the U.S. Dept. of Veterans Affairs supplies a grant to purchase the specially adapted vehicle Sale of tangible personal property manufactured or assembled in Georgia for export when delivery is taken outside of Georgia Aircraft, watercraft, motor vehicles, and other transportation equipment manufactured or assembled in this State for exclusive use outside Georgia Common or Common and Contract Carriers Partial sales tax exemption for jet fuel sold to or used by a qualifying airline at a qualifying airport Certain machinery used in the manufacturing of tangible personal property (expires January 1, 2013) Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 1 (m) 0 Exemption (m) (m) 0 Exemption 2 1 0 Exemption 33 17 0 Exemption 12 6 0 Exemption (m) (m) (m) Exemption Estimate not available at this time Exemption Estimate not available at this time Exemption Exemption Exemption Estimate not available at this time 20 21 22 175 90 0 26 | P a g e Expenditure 4.03410 4.03420 4.03430 4.03440 4.03500 4.03600 4.03610 4.03700 4.03800 4.03900 Summary of State Tax Expenditures $ in Millions Summary Machinery and equipment used to handle, move, or store tangible personal property in certain distribution facilities Machinery and equipment used directly to remanufacture certain aircraft engines or aircraft engine parts The sale or use of repair or replacement parts, machinery clothing, molds, dies, waxes or tooling for machinery (expires January 1, 2013) Sales of tangible personal property to or used in or for the construction of a new alternative fuel facility primarily dedicated to the production and processing of ethanol, biodiesel, butanol or their by-products (expired 6/30/2012) Certain materials used in industrial packaging (expires January 1, 2013) Machinery and equipment used in a facility for the primary purpose of reducing or eliminating air and water pollution Machinery and equipment used for water conservation and incorporated into a qualified water conservation facility. Machinery and equipment used in combating air and water pollution and any industrial material used in a burning or recycling process (expiring January 1, 2013) Sale of tangible personal property and fees and charges for services by the Rock Eagle 4-H center Certain sales by a public or private school of tangible personal property, concessions, and tickets for admission to school functions Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 3 3 3 Exemption (m) (m) (m) Exemption Estimate not available at this time Exemption 2 0 0 Exemption Exemption Estimate not available at this time Estimate not available at this time Exemption Estimate not available at this time Exemption Estimate not available at this time Exemption (m) (m) (m) Exemption 3 3 3 27 | P a g e Expenditure 4.03910 4.04000 4.04100 4.04200 4.04300 4.04400 4.04500 4.04600 4.04700 4.04800 4.04900 Summary of State Tax Expenditures $ in Millions Summary Cargo containers and related chassis used for storage or shipping by persons engaged in international shipment of tangible personal property Sale of major components or repair parts installed in military aircraft, vehicles, or missiles Sale of tangible personal property and services to a nonprofit child-caring institute, child-placing agency, or maternity home Use or lease of tangible personal property when the lessor and lessee are under 100 percent common ownership and where the person who furnishes, leases, or rents the property has paid sales or use tax on the property Revenues from coinoperated amusement machines for which individual permits are required Sales of motor vehicles to nonresident purchasers when vehicles are immediately removed from Georgia and titled in another state. The sale or use of paper stock when used to print catalogs for distribution outside Georgia. Sales of tangible personal property or taxable services to nonprofit blood banks Sales of drugs dispensed by prescription, prescription glasses, contact lenses, contact lens samples and sales or use of certain controlled substances or dangerous drugs Sales of crab bait to licensed commercial fishermen Liquefied gases and other fuels used in poultry or pullet houses or structures (expires January 1, 2013) Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 Estimate not available at this time Exemption 44 40 34 Exemption 1 1 1 Exemption Estimate not available at this time Exemption 2 2 2 Exemption Estimate not available at this time Exemption Estimate not available at this time Exemption Exemption (m) (m) (m) 388 405 423 Exemption (m) (m) (m) Exemption 3 2 0 28 | P a g e Expenditure 4.05000 4.05100 4.05200 4.05300 4.05400 4.05500 4.05600 4.05700 4.05900 4.06000 4.06100 4.06200 4.06300 Summary of State Tax Expenditures $ in Millions Summary Sales of blood measuring devices, monitoring equipment, or insulin delivery systems used exclusively by diabetics; insulin, insulin syringes and blood glucose monitoring strips Sales of oxygen when prescribed by a licensed physician Sale or use of hearing aids Transactions where food stamps or WIC coupons are used as the method of payment Sale or use of any durable medical equipment or prosthetic device prescribed by a physician Sale of Georgia lottery tickets Sales by any qualified nonprofit parent teacher organization Food purchased for off premises consumption Sales of eligible food and beverages for on or offpremises consumption by any Girl or Boy Scout council Sales of certain machinery and equipment used to improve air quality in a clean room of Class 100,000 or less Advertising inserts that are used in newspapers for resale Sod grass sold in the original state of production by the sod producer, employee of the producer, or family member of the producer Funeral merchandise when paid with funds from the Georgia Crime Victims' Emergency fund Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 19 20 22 Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption 5 5 5 4 4 4 123 117 111 Included in 4.04700 160 165 171 (m) (m) (m) 432 472 509 1 1 1 Exemption Estimate not available at this time Exemption Exemption Estimate not available at this time 4 4 4 Exemption (m) (m) (m) 29 | P a g e Expenditure 4.06400 4.06500 4.06600 4.06700 4.06800 4.06900 4.07000 4.07100 4.07200 4.07300 4.07500 4.07700 Summary of State Tax Expenditures $ in Millions Summary Sales of electricity or fuels used exclusively for the operation of an irrigation system on a farm for crop irrigation (expires January 1, 2013) Sales of dyed diesel fuel used exclusively for operations of vessels or boats by licensed commercial fishermen Sales of gold, silver, or platinum bullion Sales of coins or currency Sales of certain computer equipment when the total qualifying purchases by a high technology company exceed $15 million Sales of machinery and equipment and material incorporated and used in a clean room of Class 100 or less Sales of natural gas used directly in the manufacture of electricity Sales to or by an organization whose primary purpose is to raise funds for books, materials, and programs for public libraries Sales of wheelchairs and attachments for wheelchairs when sold to permanently disabled individuals Sales of certain production equipment to film producers and film production companies (expires January 1, 2013) Sales tax holiday for back to school items (expires August 10, 2013) Liquefied gases and other fuels used in structures where plants, floral products, seedlings, and nursery stock are grown for sale (expires January 1, 2013) Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 20 15 0 Exemption (m) (m) (m) Exemption Exemption Exemption Estimate not available at this time Estimate not available at this time Estimate not available at this time Exemption Estimate not available at this time Exemption 37 36 36 Exemption (m) (m) (m) Exemption Exemption Included in 4.04700 10 5 0 Exemption Exemption 0 39 41 1 (m) 0 30 | P a g e Expenditure 4.07800 4.07900 4.08100 4.08200 4.08300 4.08600 4.08800 4.09000 4.09100 4.09200 Summary of State Tax Expenditures $ in Millions Summary Materials used to construct a new symphony hall costing in excess of $200 million that is owned and operated by a nonprofit organization (expired 9/1/2011) Ice used to chill poultry or vegetables during processing or shipment (expires January 1, 2013) The purchase of food and nonalcoholic beverages provided at no charge aboard a qualified airline Sales tax holiday for water and energy efficient purchases (expires October 6, 2013) Sale of biomass materials used to produce electricity or steam or used to produce electricity and steam intended for sale Sales of engines, parts, equipment and other tangible personal property used in the maintenance or repair of certain aircraft (expires 6/30/2013) Sales of tangible personal property used in the construction of a qualified civil rights museum (expires 7/30/2015) The sale of electricity to a manufacturer located in this state used directly in the manufacture of a product (expires January 1, 2013) The sale of prewritten software which has been delivered to the purchaser electronically or by means of load and leave. Sales to an organization defined by the Internal Revenue Service as an instrumentality of the states relating to the holding of an annual meeting in this state for the period commencing July 1, 2012, and ending on December 31, 2013. Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 0 0 0 Exemption Exemption Exemption Exemption Estimate not available at this time 5 4 4 0 (m) (m) (m) (m) (m) Exemption 7 7 0 Exemption (m) (m) (m) Exemption Estimate not available at this time Exemption Estimate not available at this time Exemption Estimate not available at this time 31 | P a g e Expenditure 4.09300 4.09400 4.3.20000 4.3.30000 4.50000 4.50001 4.50002 4.50003 4.50004 4.50005 4.50006 4.50007 4.50008 4.50009 Summary of State Tax Expenditures $ in Millions Summary Tax Sales of tangible personal property used for and in the construction of a competitive project of regional significance, for the period commencing January 1, 2012, until June 30, 2014. The sale, use, consumption, or storage of materials, containers, labels, sacks, or bags used for packaging tangible personal property for shipment or sale. Exemptions for energy, machinery or equipment, industrial material, and consumable supplies used in manufacturing Sales and use by a qualified agriculture producer of agricultural production inputs, energy used in agriculture, and agricultural machinery and equipment Admissions and Amusements Agricultural Services Automotive Services Business Services Computer and Online Services Construction Labor Fabrication, Installation, and Repair Services Finance, Insurance, and Real Estate Industrial and Mining Services Residential Utility Service Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Type of Expenditure Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption State FY State FY State FY 2012 2013 2014 Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time 102 106 83 493 202 1,542 167 355 7 106 104 109 85 506 207 1,584 171 364 7 108 109 114 89 530 217 1,660 179 382 7 113 32 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Tax 4.50010 Personal Services 4.50011 Professional Services 4.50012 Storage 4.50013 Transportation Services 4.70000 Compensation of dealers for reporting and paying tax 4.90000 Sales tax exemption for casual sales Insurance Premium Tax Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax for Services Sales and Use Tax Sales and Use Tax Type of Expenditure Exemption Exemption Exemption Exemption Exemption Exemption State FY State FY State FY 2012 2013 2014 153 157 165 1,218 1,251 1,311 46 48 50 (m) (m) (m) 53 56 58 151 125 2 5.00100 Deduction of retaliatory Insurance Deduction 2 2 2 taxes paid to other states Premium Tax 5.00200 Insurance premium tax Insurance Credit 77 79 81 credits Premium Tax 5.00300 Exemption for premiums of Insurance Exemption 1 1 1 high deductible health plans Premium Tax 5.00400 Exemption for insurance Insurance Exemption (m) (m) (m) companies that only insure Premium places of worship Tax 5.00500 Insurance abatements Insurance Rate Reduction 133 137 141 Premium Tax 5.00600 Special deductions for life Insurance Deduction 114 118 120 insurance companies Premium Tax Motor Fuel Tax 6.00100 Motor fuel tax refunds for agricultural purposes 6.00200 Sales to mass transit vehicles 6.00300 Sales to campus transportation vehicles 6.00400 Motor fuel tax exemption for aviation fuel 6.00500 Motor fuel tax vendor compensation Alcoholic Beverage Tax Motor Fuel Tax Motor Fuel Tax Motor Fuel Tax Motor Fuel Tax Motor Fuel Tax Exemption Exemption Exemption Exemption Exemption 20 20 20 3 3 3 Included in 6.00200 (m) (m) (m) 5 5 5 7.00100 7.00200 Sales to persons outside the state for resale or consumption outside the state Sales to stores or canteens in U.S. military reservations Alcoholic Beverage Tax Alcoholic Beverage Tax Exemption Exemption Estimate not available at this time Estimate not available at this time 33 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary 7.00300 7.00400 7.00500 Up to 200 gallons annually of home-brew per household Sales to and use by religious organizations for sacramental purposes Exemption for ethyl alcohol used for certain purposes 7.00600 Malt beverages containing less than one-half of 1 percent alcohol by volume Cigar and Cigarette Tax Tax Alcoholic Beverage Tax Alcoholic Beverage Tax Alcoholic Beverage Tax Alcoholic Beverage Tax Type of Expenditure Exemption State FY State FY State FY 2012 2013 2014 (m) (m) (m) Exemption (m) (m) (m) Exemption (m) (m) (m) Exemption (m) (m) (m) 8.00100 Exemption for purchases Cigar and for use exclusively by Cigarette patients at the Georgia War Excise Tax Veterans Home and the Georgia War Veterans Nursing Home 8.00200 Di minimus amount Cigar and brought into the state by Cigarette one person Excise Tax 8.00300 Cigars and cigarettes stored Cigar and in a public warehouse Cigarette Excise Tax 8.00400 Certain cigars and Cigar and cigarettes held by licensed Cigarette dealers Excise Tax Financial Institutions Business License Tax Exemption Exemption Exemption Exemption (m) (m) (m) Estimate not available at this time Estimate not available at this time Estimate not available at this time 9.00100 Deduction for interest paid Financial Institutions Business License Tax 9.00200 Deductions for income Financial from authorized activities Institutions of a domestic international Business banking facility License Tax 9.00300 Deduction for income from Financial banking business with Institutions persons or entities outside Business the U.S. License Tax State Grant for Forest Land Conservation Deduction Deduction Deduction 3 3 3 Estimate not available at this time Estimate not available at this time 10.00000 Special assessment of forest land conservation use property State Grant Credit 14 17 21 34 | P a g e Summary of State Tax Expenditures $ in Millions Expenditure Summary Title Fee for Motor Vehicles Tax Type of State FY State FY State FY Expenditure 2012 2013 2014 11.001 11.002 Exemption for a vehicle when transferred between immediate family members as a result of the death of an immediate family member Exemption for the sale of a vehicle to a serviceconnected disabled veteran when the veteran received a grant from the United States Department of Veterans Affairs to purchase and specially adapt the vehicle to his or her disability Title Fee Title Fee Exemption Exemption Estimate not available at this time Estimate not available at this time 35 | P a g e 1. Personal Income Tax The personal income tax was first levied in Georgia in 1929 at a rate equal to one third the federal rate of income taxation. The current rate structure which includes 6 brackets, ranging from 1 percent to 6 percent, has remained unchanged since 1955 when the 7 percent rate on taxable incomes over $20,000 was eliminated. The threshold for each bracket depends on the filing status of the taxpayer, i.e. single or head of household, married filing separate or joint. The individual income tax collections equaled $7.7 billion in FY2011 and accounted for 50 percent of Georgia's revenues from taxation. In CY2011, 4.2 million individual returns were filed with the state. While predominately paid by individuals, a significant number of business activities are organized so that income associated with these enterprises is reported through the individual income tax. All revenue collected from the individual income tax is deposited in the state general fund. The initial base of the Georgia individual income tax is the taxpayer's federal adjusted gross income (AGI). Several adjustments are made to this starting point to arrive at the version of adjusted gross income adopted by Georgia. After computing the Georgia version of AGI, taxpayers deduct an amount representing either the value of their Georgia itemized deductions or the Georgia standard deduction. In addition, for tax year 2012 and before, filers are allowed a personal exemption of $5,400 for joint filers and $2,700 for other filers and $3,000 for each dependent. For tax years after 2012, the personal exemption for joint filers will be $7,400 and will be $3,700 for married taxpayers filing a separate return. The tax expenditure report includes the expenditures associated with both state and federal tax provisions. Because the Georgia individual income tax is based on the federal system, expenditures that are present at the federal level have revenue implications at the state level. For example, changes to itemized deductions by the federal government have repercussions on Georgia state tax revenues. The value of the expenditure as it relates to state taxes paid by those filing a Georgia return is presented in the section below on federal tax expenditures. In some cases, Georgia might not adopt a federal deduction. In that case, the expenditure is not listed because there is no loss of revenue to the state. In general, the value of the federal tax expenditure to the state of Georgia is determined by allocating a portion of the federal tax base associated with the expenditure estimate as estimated by the Joint Committee on Taxation for the U.S. Congress. The data and estimate reliability for the conformity provisions are considered class A. In some cases though, the value of the Georgia estimates are highly sensitive to the assumptions made concerning the appropriate tax rate for a given expenditure provision and the allocation factor that is used to determine the amount of federal activity associated with Georgia. The estimates associated with the federal conformity provisions are based on current law as it existed in November 2012. Therefore, any changes to provisions that may occur because of federal legislative action that occurred after that period are not reflected in the estimates. 36 | P a g e The explanation of the federal conformity provisions was taken from Tax Expenditures: Compendium of Background Material in Individual Provisions, published by the Committee on the Budget, United States Senate and prepared by the Congressional Research Service, December 2010. 37 | P a g e 1.1 Federal Exclusions 1.1.001 Exclusion of employee meals and lodging Federal Statute IRC section 119 and 132(e)(2) Description: Employees are allowed to exclude the fair market value of meals and lodging furnished by employers if provided on the employer's premises for the convenience of the employer. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 8 8 9 (m) Denotes a value of less than $1 million 1.1.002 Exclusion of housing allowances for ministers Federal Statute IRC Section 107 and 265 Description: In general, this provision allows ministers to deduct certain housing related expenditures from their gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 5 5 5 (m) Denotes a value of less than $1 million 1.1.003 Exclusion of employer-provided child care Federal Statute IRC Section 129 Description: Payments by an employer, under a dependent care assistance program, for qualified dependent care assistance provided to an employee are excluded from the employee's income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 13 10 9 (m) Denotes a value of less than $1 million 1.1.004 Exclusion of employee awards Federal Statute IRC Section 74(c) and 274(j) Description: This provision provides an exclusion for certain awards of tangible personal property given to employees for length of service or for safety achievement. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 1.1.005 Exclusion of employer contributions and earnings to pension plans. (Includes Keoghs, defined benefit and defined contribution plans) Federal Statute IRC Sections 401-407, 410-418E, and 457 Description: Employer contributions to qualified pension, profit-sharing, stock- bonus, and annuity plans on behalf of an employee are not taxable to the employee. Furthermore, the employee is generally not taxed on 38 | P a g e the benefits when they are distributed. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 848 994 1,132 (m) Denotes a value of less than $1 million 1.1.006 Exclusion for employer contributions for health care, health insurance premiums and long-term care insurance premiums Federal Statute IRC Sections 105,106, and 125 Description: Employees are allowed to exclude contributions by their employers for health care coverage for themselves and their dependents. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 831 959 1,073 (m) Denotes a value of less than $1 million 1.1.007 Exclusion for employer paid accident and disability premiums Federal Statute IRC Sections 105 and 106 Description: Premiums paid by employers for employee accident and disability insurance plans are excluded from the taxable income of employees. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 23 24 25 (m) Denotes a value of less than $1 million 1.1.008 Exclusion for employer contributions for premiums on group long term life insurance Federal Statute IRC Section 79 Description: Premiums paid by the employer for qualified group-term life insurance plans for the employee are excluded from employee's taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 11 12 13 (m) Denotes a value of less than $1 million 1.1.009 Exclusion for employer-paid transportation benefits and employer-provided transit and vanpool benefits Federal Statute IRC Section 132(f) Description: Employer provided qualified transportation benefits are excluded from employee taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 33 35 36 (m) Denotes a value of less than $1 million 1.1.010 Exclusion for benefits provided through cafeteria plans Federal Statute IRC Section 125 39 | P a g e Description: Qualified benefits offered through an employer's cafeteria plan are not included as taxable income to the employee. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 232 260 286 (m) Denotes a value of less than $1 million 1.1.011 Exclusion for employer provided adoption assistance Federal Statute IRC Section 137 Description: Benefits received from a qualified employer-sponsored adoption assistance program are excludable from taxable income for the employee. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 1 (m) (m) Denotes a value of less than $1 million 1.1.012 Exclusion for employer provided education benefits (including education assistance and tuition reduction benefits) Federal Statute IRC Section 117(d) and Section 127 Description: Tuition reductions for employees of educational institutions may be excluded from taxable income. In addition, an employee may exclude amounts paid by the employer for qualified educational assistance programs. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 7 7 (m) Denotes a value of less than $1 million 1.1.013 Exclusion of miscellaneous fringe benefits Federal Statute IRC Section 132 and 117(D) Description: Certain miscellaneous fringe benefits provided by employers, including services provided at no additional costs, employee discounts, working condition fringes, de minimus fringes and certain tuition reductions, can be excluded from the employee's taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 43 44 44 (m) Denotes a value of less than $1 million 1.1.014 Exclusion of foreign earned income (including housing and salary) Federal Statute IRC Section 911 Description: U.S. taxpayers who live and work abroad are allowed a capped exclusion of their wage and salary income. In addition, qualified individuals can also exclude certain excess foreign housing costs. This provision does not apply to federal employees working abroad. 40 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 42 43 44 1.1.015 Exclusion of certain allowances for federal employees abroad Federal Statute IRC Section 912 Description: U.S. federal civilian employees who work abroad are allowed to exclude from taxable income certain special allowances they receive that are generally linked to the cost of living. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 14 15 16 (m) Denotes a value of less than $1 million 1.1.016 Exclusion of benefits and allowances to armed forces personnel (includes expenditure for military disability benefits) Federal Statute IRC Section 112, 134, 104(a)(4) or (5) and 104(b) Description: Military personnel are provided with a variety of in-kind benefits (or cash payments in lieu of such benefits) that are not taxed. In addition, certain members of the armed forces are eligible for tax exclusion of disability pay. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 81 89 96 (m) Denotes a value of less than $1 million 1.1.017 Medical care and Tricare Medical Insurance for military dependents and retirees Federal Statute IRC Section 134 Description: Military personnel are provided with a variety of in-kind benefits (or cash payments in lieu of such benefits) that are not taxed. In addition, certain members of the armed forces are eligible for tax exclusion of disability pay. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 39 40 41 (m) Denotes a value of less than $1 million 1.1.018 Exclusion for Veterans' Benefits (includes veteran's disability compensation, pensions, and readjustment benefits) Federal Statute 38 U.S.C. Section 5301 Description: All benefits administered by the Department of Veteran's Affairs are exempt from income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 48 49 49 (m) Denotes a value of less than $1 million 41 | P a g e 1.1.019 Exclusion of income attributable to the discharge of certain student loan debt and NHSC and certain state educational loan repayments Federal Statute IRC Section 108(f) Description: This section provides that in certain instances, student loan cancellation and student loan repayment assistance may be excluded from gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.1.020 Exclusion of Workers' Compensation benefits (includes disability and survivor benefits and medical benefits, and exclusion of damages on account of personal physical injuries or physical sickness) Federal Statute IRC Section 104(a)(1)-(5) Description: Employees are not taxed on the value of insurance contributions for workers' compensation medical benefits made on their behalf by employers, or on the medical benefits or reimbursements they actually receive. Workers' compensation benefits to employees in cases of work-related injury and to survivors in cases of work-related death, are not taxable. Damages paid, through either a court award or a settlement, to compensate for physical injury and sickness are not included in income of the recipient. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 69 68 68 (m) Denotes a value of less than $1 million 1.1.021 Exclusion for special benefits for disabled coal miners Federal Statute IRC Section 104(a)(1) Description: Cash and medical benefits to coal mine workers or their survivors for total disability or death resulting from coal workers' pneumoconiosis (black lung disease) paid under the Black Lung Benefits Act generally are not taxable. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.1.022 Exclusion of untaxed Social Security and railroad retirement benefits Federal Statute IRC Section 86 Description: In general, Social Security and Railroad retirement benefits are not subject to tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 175 199 223 (m) Denotes a value of less than $1 million 42 | P a g e 1.1.023 Exclusion of Medicare benefits Federal Statute Rev. Rul. 70-341, IRC Section 139A, Section 112 and 134 Description: The employer's share of the payroll tax is excluded from an employee's taxable income. Transfers from the general fund of the U.S Treasury to pay for the cost of covered services are excluded from the taxable income of enrollees. Transfers from the general fund of the U.S. Treasury and state governments to pay for the cost of the drug benefit not covered by premiums are excluded from the taxable income of enrollees. Employers who choose to receive subsidy payments are allowed to exclude them from their taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 360 405 443 (m) Denotes a value of less than $1 million 1.1.024 Exclusion of certain foster care payments Federal Statute IRC Section 131 Description: Qualified payments are excluded from the foster care provider's gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 1.1.025 Exclusion of cash public assistance benefits Federal Statute IRC Section 61 Description: Cash benefits provided on a needs basis by the Federal Government are not included in taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 37 43 45 (m) Denotes a value of less than $1 million 1.1.026 Exclusion of scholarship and fellowship income Federal Statute IRC Section 117 Description: Scholarships and fellowships can be excluded from the gross income of students and their families provided: (1) the students are pursuing degrees and (2) the amounts are used for tuition and fees required for enrollment or for books, supplies, fees, and equipment required for courses at a qualified institution. Amounts used for room, board and incidental expenses are not excluded from gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 14 15 16 (m) Denotes a value of less than $1 million 43 | P a g e 1.1.027 Exclusion for earnings of Coverdell education savings accounts and interest on educational savings bonds Federal Statute IRC Section 530 Description: Contributions to a Coverdell Education Savings Account are not deductible but the earnings grow on a tax deferred basis. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.1.028 Exclusion of earnings of qualified tuition programs (including prepaid tuition programs and savings account programs) Federal Statute IRC Section 529 Description: Contributions to qualified tuition programs are not deductible at the federal level but earnings accumulate on a tax-deferred basis. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 4 5 6 (m) Denotes a value of less than $1 million 1.1.029 Exclusion for certain agricultural cost-sharing payments Federal Statute IRC Section 126 Description: Grants made for the purpose of conserving soil and water resources or protecting the environment are excluded from the recipient's taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.1.030 Exclusion of discharge of indebtedness for certain farmers Federal Statute Sections 108 and 1070(b)(4) Description: The provision allows farmers who are solvent to treat the income arising from the cancellation of certain indebtedness as if they were insolvent taxpayers. Under this provision, income that would normally be subject to tax would be excluded from tax under qualifying conditions. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.1.031 Exclusion of interest on state and local government private activity bonds Federal Statute Various Description: Interest earned on qualified private activity bonds is tax exempt. 44 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) 1.1.032 Exclusion of capital gains from sale of principle residences Federal Statute IRC Section 121 Description: A taxpayer may exclude from federal income tax up to $250,000 of capital gain ($500,000 in the case of married taxpayers filing joint returns) from the sale or exchange of their principal residence. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 163 189 204 (m) Denotes a value of less than $1 million 1.1.033 Exclusion of capital gains at death Federal Statute IRC Sections 1001,1002,1014,1015,1023,1040,1221, and 1222 Description: A capital gain tax is not imposed on the increased value of an asset when ownership of the property is transferred as a result of the death of the owner. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 167 187 225 (m) Denotes a value of less than $1 million 1.1.034 Exclusion of capital gains on gifts Federal Statute IRC Sections 1001,1002,1014,1015,1023,1040,1221, and 1222 Description: A capital gain tax is not imposed on the increased value of an asset when ownership of the property is transferred as a gift during the owner's lifetime. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 37 58 28 (m) Denotes a value of less than $1 million 1.1.035 Exemption from imputed interest rules Federal Statute IRC Sections 163(e), 483, 1274, and 1274A Description: Debt instruments for amounts not exceeding an inflation adjusted maximum, given in exchange for real property, may not have imputed to them an interest rate greater than 9 percent. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 1.1.036 Exclusion of combat pay Federal Statute IRC Section 112 45 | P a g e Description: Compensation received by active members of the Armed Forces is excluded from gross income for any month the service member served in a combat zone or was hospitalized as a result of an injury or illness incurred while serving in a combat zone. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 18 19 20 (m) Denotes a value of less than $1 million 1.1.037 Exclusion of energy conservation subsidies provided by public utilities Federal Statute IRC Section 136 Description: In general, this provision allows customers to deduct from their gross income the value of any subsidy provided by a public utility for the purchase or installation of any energy conservation measure. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.1.038 Exclusion from income attributable to the discharge of principal residence acquisition indebtedness Federal Statute IRC Section 108 Description: Taxpayers who are insolvent or in bankruptcy may exclude canceled mortgage debt income from gross income. In addition, discharged qualified residential debt is excluded from gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 5 3 (m) (m) Denotes a value of less than $1 million 1.1.039 Exclusion of gain for certain small business stock Federal Statute IRC Sections 1202 and 303 Description: This provision allows non-corporate taxpayers to exclude from gross income 50 percent of any gain from the sale or exchange of qualified small business stock issued after August 10, 1993. When a shareholder in a closely held business dies there is no reported gain or loss on the partial redemption of stock. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 3 (m) Denotes a value of less than $1 million 1.1.040 Exclusion of interest on public purpose State and local government bonds Federal Statute IRC Sections 103, 141 and 146 Description: Interest income of qualifying governmental bonds is excluded from taxable income (expenditure estimate has been adjusted to reflect GA law that only interest on GA bonds is excluded from income). 46 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 2 2 2 1.1.041 Exclusion of income earned by voluntary employees' beneficiary associations Federal Statute IRC Sections 501(a) and 501(c)(9) Description: Provided certain requirements are met, the income earned by a voluntary employee beneficiary association (VEBA) is exempt from federal income taxes. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 22 24 26 (m) Denotes a value of less than $1 million 1.1.042 Exclusion of survivor annuities paid to families of public safety officers killed in the line of duty Federal Statute IRC Section 101(h) Description: The surviving spouse of a public safety officer killed in the line of duty can exclude from gross income a survivor annuity payment under a governmental pension plan. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.1.043 Exclusion of disaster mitigation payments Federal Statute IRC Section 139 Description: Payments made for disaster mitigation under the Robert T. Stafford Disaster Relief and Emergency Insurance Act or the National Flood Insurance Act are excluded from income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 47 | P a g e 1.2 Federal Deductions 1.2.001 Accelerated depreciation (MACRS) Federal Statute IRC Sections 167 and 168 Description: Under the Modified Accelerated Cost Recovery System (MACRS) the cost of tangible depreciation property of certain energy property is allowed a shorter depreciation period. Taxpayers are allowed to deduct the costs of new rental housing and buildings other than rental housing and equipment to be depreciated on an accelerated schedule. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 46 44 42 (m) Denotes a value of less than $1 million 1.2.002 Deduction for expenditures on energy-efficient commercial building property Federal Statute IRC Section 179D Description: This provision provides a formula-based tax deduction for all or part of the cost of energy-efficient commercial building property placed in service after 12/31/2005 and before 1/1/2014. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.2.003 Deduction of exploration and development costs of nonfuel minerals. (Includes excess of depletion over cost depletion, nonfuel minerals) Federal Statute IRC Sections 263, 291, 616-617,56,1254 Description: Firms engaged in mining are permitted to expense certain exploration and development costs. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.004 Amortization of business startup costs Federal Statute IRC Section 195 Description: This provision allows a business taxpayer to deduct up to $10,000 in qualified start-up expenditures. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 11 10 9 (m) Denotes a value of less than $1 million 1.2.005 Expensing of research and development costs in lieu of R&D tax credit Federal Statute IRC Section 174 48 | P a g e Description: This provision allows a business taxpayer to deduct certain research expenditures that are paid or incurred in connection with the taxpayer's trade or business. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.006 Expensing of magazine circulation expenditures Federal Statute IRC Section 173 Description: In general, current federal tax law allows publishers of newspapers, magazines, and other periodicals to deduct their expenditures to maintain, establish, or increase circulation in the year in which they are made. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.007 Deductions for oil and gas exploration and development costs Federal Statute IRC Sections 611, 612,613,613A and 291; 263(c), 616-617, 57(a)(2), 59(e) and 1254 Description: Firms that extract oil, gas or other minerals are permitted a deduction to recover their capital investment in a mineral reserve, which depreciates due to the physical and economic depletion or exhaustion as the mineral is recovered. Firms engaged in the exploration and development of oil, gas or geothermal properties have the option of expensing certain intangible drilling and development costs. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.008 Special treatment for expenses related to timber production Federal Statute IRC Sections 194, 263A(c)(5) Description: This provision allows expensing of production costs of growing timber. Taxpayers are also allowed different depreciation practices for qualified reforestation expenses. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 1.2.009 Expensing under IRC section 179 of depreciable business property Federal Statute IRC Section 179 Description: Within certain limits, a taxpayer may elect to deduct as a current expense the cost of qualifying property in the tax year when it is placed in service. 49 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 24 14 -6 1.2.010 Exceptions for publicly traded partnership with qualified income derived from certain energy-related activities Federal Statute IRC Section 7704 Description: This code section allows publicly traded partnerships to be treated as a corporation for the purposes of the federal income tax under most situations. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.2.011 Treatment of income from exploration and mining as qualified income for publicly traded partnerships Federal Statute IRC Section 7704 Description: This code section allows publicly traded partnerships to be treated as a corporation for the purposes of the federal income tax under most situations. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.2.012 Various agricultural expense provisions Federal Statute IRC Sections 175, 180, 1231 Description: Taxpayers in the business of farming may choose to expense costs associated with soil and water conservation, soil conditioning and the costs associated with raising dairy and breeding cattle. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.013 Community and regional development incentives Federal Statute IRC Sections 38(b), 39(d), 45A, 280C(a), 1391-1397D Description: Communities designated as empowerment zones and renewable communities are eligible for special development incentives. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 50 | P a g e 1.2.014 Expensing to remove architectural and transportation barriers to the handicapped and elderly Federal Statute IRC Section 190 Description: This provision allows taxpayers to deduct up to $15,000 of expenses incurred in a single year for removing physical barriers to handicap or elderly individuals in qualified facilities or public transportation vehicles owned or leased by the taxpayer. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.015 Inventory methods and valuation, including last in first out, lower of cost or market, specific identification for homogenous products Federal Statute IRC Sections 475, 491-492 Description: This provision allows taxpayers to use alternative inventory systems to determine cost of goods sold. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 5 5 5 (m) Denotes a value of less than $1 million 1.2.017 Health Savings Accounts Federal Statute IRC Section 223 Description: This provision allows taxpayers to deduct their health savings account contributions from their gross income in determining their taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 9 11 (m) Denotes a value of less than $1 million 1.2.018 Deduction for property taxes on real property Federal Statute IRC Section 164 Description: Taxpayers may claim an itemized deduction for property taxes paid on owner-occupied residences. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 94 98 123 (m) Denotes a value of less than $1 million 1.2.019 Deduction for nonbusiness state and local government income taxes, sales taxes and property taxes Federal Statute IRC Section 164 Description: State and local income, sales and personal property taxes paid by individuals are deductible from adjusted gross income. 51 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 215 239 295 1.2.020 Deduction for mortgage interest on owner-occupied residences Federal Statute IRC Section 163(h) Description: A taxpayer may claim an itemized deduction for "qualified residence interest" which includes interest paid on a mortgage secured by a principal residence and a second residence. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 531 555 604 (m) Denotes a value of less than $1 million 1.2.021 Deduction for charitable contributions (includes deductions for health, education, and other than health and education) Federal Statute IRC Sections 170 and 642(c) Description: Subject to certain limitations, charitable contributions may be deducted by individuals. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 352 394 416 (m) Denotes a value of less than $1 million 1.2.022 Deduction for casualty and theft losses Federal Statute IRC Sections 165(c)(3), 165(e), 165(h)-165(k) Description: An individual may claim an itemized deduction for unreimbursed personal casualty or theft losses up to a specified limit. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 1.2.023 Deduction for overnight expenses for National Guard and Reserve members Federal Statute IRC Sections 162(p) and 62(a)(2)(E) Description: An above-the-line deduction is available for unreimbursed overnight travel, meals, and lodging expenses of National Guard and Reserve members. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.2.024 Deduction for premiums for qualified mortgage insurance Federal Statute IRC Section 163(h) 52 | P a g e Description: Qualified mortgage insurance premiums paid with respect to a qualified residence can be treated as tax deductible residence interest. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 (m) 0 (m) Denotes a value of less than $1 million 1.2.025 Deduction for interest on student loans Federal Statute IRC Section 221 Description: Taxpayers may deduct interest paid on qualified education loans in determining their adjusted gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 6 5 3 (m) Denotes a value of less than $1 million 1.2.026 Deduction for higher education expenses Federal Statute IRC Section 222 Description: Taxpayers may deduct qualified tuition and related expenses for postsecondary education from their adjusted gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 1 0 (m) Denotes a value of less than $1 million 1.2.027 Deduction for teacher classroom expenses Federal Statute IRC Section 62 Description: An eligible employee of a public or private elementary or secondary school may claim a deduction for certain unreimbursed expenses. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.2.028 Deduction for health insurance premiums and long-term care insurance premiums by the self-employed Federal Statute IRC Section 161(l) Description: Generally, a self-employed individual may deduct the entire amount paid for health insurance or long term care insurance. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 21 25 27 (m) Denotes a value of less than $1 million 53 | P a g e 1.2.029 Deduction for medical expenses and long term care expenses Federal Statute IRC Section 213 Description: Most medical expenses that are paid by an individual but not reimbursed by an employer or insurance company may be deducted from taxable income to the extent they exceed 7.5 percent of adjusted gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 69 84 100 (m) Denotes a value of less than $1 million 1.2.030 Deduction for IRAs, includes traditional IRAs and Roth IRAs. Federal Statute IRC Sections 219 and 408 Description: Individuals participating in a traditional or Roth IRA are allowed to deduct contributions in the case of traditional IRAs and distributions in the case of Roth IRAs. Both exemptions are phased out for higher income individuals. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 60 80 101 (m) Denotes a value of less than $1 million 54 | P a g e 1.3 Special Federal Conformity Provisions 1.3.001 Like-kind exchanges Federal Statute IRC Section 1031 Description: When business or investment property is exchanged for property of a "like kind" no gain or loss is recognized on the exchange and therefore no tax is paid at the time of the exchange. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 4 5 (m) Denotes a value of less than $1 million 1.3.002 Special rules for magazine, paperback book, and record returns Federal Statute IRC Section 458 Description: Publishers and distributors of magazines, paperbacks, and records may elect to exclude from gross income for a tax year, the income from the sale of goods that are returned after the close of the tax year. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.3.003 5 year carryback for net operating losses attributable to farming Federal Statute IRC Section 172 Description: Current law provides a 5 year carryback period for losses related to farming. The normal carryback period for losses is two years. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.3.004 Special rules for mining reclamation reserves Federal Statute IRC Section 468 Description: Electing taxpayers may deduct the current value equivalent of certain estimated future reclamation and closing costs for mining and solid waste disposal sites. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.3.005 Cash accounting, other than agriculture Federal Statute IRC Sections 446 and 448 Description: The cash method of accounting may be used by any business taxpayer that is not a tax shelter and falls into at least one of three specified categories. 55 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 8 8 8 1.3.006 Deferral of gain on non-dealer installment sales Federal Statute IRC Sections 453 and 453A(b) Description: Some taxpayers are allowed to report some sales using the installment method of accounting in which the gross profit from the sale is prorated over the years during which the payments are received. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 10 12 (m) Denotes a value of less than $1 million 1.3.007 Completed contract rules Federal Statute IRC Section 460 Description: Some taxpayers with construction or manufacturing contracts extending for more than one tax year are allowed to report some or all of the profit on the contracts under special accounting rules rather than the normal rules of tax accounting. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.3.008 Special treatment of employee stock ownership plans (ESOPs) Federal Statute IRC Sections 401(a)(28), 404(a)(9), 404(k), 415(c)(6),1042,497(e)(7), 4978,4979A, 422-423 Description: Employer contributions may be deducted as a business expense. In addition, some contributions are subject to less restrictive limits than contributions to other employee benefit plans. Tax on qualified employee stock purchase plans are not taxed when granted or excised. Tax is deferred until stock is sold. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 1.3.009 Income averaging for farmers and fishermen Federal Statute IRC Section 1301 Description: Beginning with tax years after 1997, taxpayers have the option to calculate their current year income tax by averaging over a prior 3 year period, all or a portion of their income from farming and or fishing. 56 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) 57 | P a g e 1.4 Georgia Exemptions 1.4.001 Personal Exemption State Statute 48-7-26 Year Enacted 1987 Year Effective 1987 Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note For distributional analysis see Table 3 in the appendix Description: For tax years 2012 a before Georgia allows a personal exemption equal to $5,400 for joint returns and $2,700 for taxpayers' filing non- joint returns. $3,000 is excluded from income for each dependent claimed on the tax return. For tax years after 2012 the personal exemption for joint filers will be $7,400 and will be $3,700 for married taxpayers filing separate return. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 867 937 1,035 (m) Denotes a value of less than $1 million 1.4.002 Retirement Income State Statute 48-7-27 Year Enacted 1971 Year Effective 1971 Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note For distributional analysis see Table 4 in the appendix. This estimate differs from earlier reports due to a change in methodology. Description: Between 2008 and prior to 2012, a maximum of $35,000 of retirement income from any source was excluded from income. This income exclusion may include a maximum of $4,000 of earned income. This provision applies to individuals aged 62 and above. For tax years beginning in 2012, individuals aged 65 and above may exclude a maximum of $65,000 of retirement income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 603 662 697 (m) Denotes a value of less than $1 million 1.4.003 Exclusion of Federally Taxable Social Security Benefits State Statute 48-7-27 Year Enacted 1971 Year Effective 1971 58 | P a g e Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note Description: Social Security and tier 1 railroad retirement benefits are excluded from state taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 129 135 140 (m) Denotes a value of less than $1 million 1.4.004 Georgia Higher Education Savings Plan Contributions State Statute 48-7-27 Year Enacted NA Year Effective Taxable years beginning on or after January 1, 2002 Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note For distributional analysis see Table 5 in the appendix; this estimate differs from earlier reports due to a change in methodology. Description: An exemption from income is allowed for contributions to a qualified higher education savings plan. The exemption is limited to $2,000 per qualified plan beneficiary. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 1.4.005 Interest on U.S. Obligations State Statute 48-7-27 Year Enacted 1971 Year Effective 1971 Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note For distributional analysis see Table 6 in the appendix Description: Interest earned on U.S. government bonds and other obligations are not included as taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 5 6 (m) Denotes a value of less than $1 million 1.4.007 Organ donation expenses State Statute 48-7-27 Year Enacted 1981 59 | P a g e Year Effective Taxable years beginning on or after January 1, 2005 Data Source 2009 Annual Report of the U.S. Organ Procurement and Transplantation Network and the Scientific Registry of Transplant Recipients developed by the U.S Department of Health and Human Services Estimate Reliability Class C Data Reliability Class B Note Description: Expenses associated with the donation of organs in accordance with the "National Organ Procurement Act". The maximum value of excluded expenses cannot exceed $10,000. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.4.008 Aged 65/Blind Deduction State Statute 48-7-27 Year Enacted 1971 Year Effective 1971 Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note For distributional analysis see Table 7 in the appendix Description: Taxpayers aged 65 or older are allowed an annual deduction from income of $1,300 per taxpayer. Taxpayers who are blind are allowed an annual deduction from income of $1,300 per taxpayer. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 6 6 7 (m) Denotes a value of less than $1 million 1.4.010 Premiums for high deductible health plans State Statute 48-7-27 Year Enacted 1981 Year Effective Taxable years beginning on or after January 1, 2008 Data Source Kaiser-Health Research and Educational Trust and America's Health Insurance Plan, Center for Policy and Research Estimate Reliability Class B Data Reliability Class A Note Description: Taxpayers are allowed to exclude 100 percent of premiums paid for certain high deductible health plans. 60 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 3 3 7 61 | P a g e 1.5 Georgia Deductions 1.5.001 Standard Deduction State Statute 48-7-27 Year Enacted 1971 Year Effective 1971 Data Source DOR Data for 2009 Estimate Reliability Class A Data Reliability Class A Note For distributional analysis see Table 8 in the appendix Description: Taxpayers that do not itemize expenses on their federal return are allowed a standard deduction equal to $2,300 for head of household and single filers, $1,500 for married filing separately and $3,000 in the case of joint filers. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 174 176 178 (m) Denotes a value of less than $1 million 62 | P a g e 1.6 Georgia Credits 1.6.001 Rural Physician's Credit State Statute 48-7-29 Year Enacted 1995 Year Effective Taxable years beginning on or after January 1, 1996 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: This credit is for certain physicians practicing in rural counties. The value of the credit is equal to the lessor of $5,000 or the taxpayer's tax liability annually and may be claimed for 5 years. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.6.002 Disabled person's home purchase or retrofit credit State Statute 48-7-29.1 Year Enacted 1998 Year Effective Taxable years beginning on or after January 1, 1999 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: This credit provides a $500 credit for the purchase of a new single- family home containing accessibility features or for the retrofit of an existing home. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.6.003 Driver Education Credit State Statute 48-7-29.5 Year Enacted 2000 Year Effective Taxable years beginning on or after January 1, 2001 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: This credit provides a credit against income tax for the lesser of $150 or the cost of a qualified driver education class. 63 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 1 1 1 1.6.004 Disaster Assistance Credit State Statute 48-7-29.4 Year Enacted 2000 Year Effective Taxable years beginning on or after January 1, 2000 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: This credit is for individuals receiving disaster relief payments from the Georgia Emergency Management Agency or from the Federal Emergency Management Agency. The credit amount is the actual amount of the disaster relief assistance or $500, whichever is less. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.6.005 Qualified Caregiving Expense Credit State Statute 48-7-29.2 Year Enacted 1998 Year Effective Taxable years beginning on or after January 1, 1999 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: This credit is for taxpayers with expenses related to the care of a qualifying family member. The value of the credit is equal to no more than 10 percent of the total amount expended for qualifying caregiving expenses. In no event shall the credit exceed $150 or the taxpayer's income tax liability, whichever is less. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 1.6.006 Tax credit for Life Insurance for Georgia National Guard and Air National Guard State Statute 48-7-29.9 Year Enacted 2005 Year Effective Taxable years beginning on or after January 1, 2005 Data Source DOR Data for 2010 & U.S. Department of Veterans Affairs Estimate Reliability Class A 64 | P a g e Data Reliability Class A Note Description: This credit is available for active duty members of the Georgia National Guard and Air National Guard on active duty for more than 90 consecutive days and who purchase qualified life insurance through the Services' Group Life Insurance Program administered by the U.S. Department of Veterans Affairs. The credit amount is equal to the cost of the premiums of the life insurance policy. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 1.6.007 Child and Dependent Care Credit State Statute 48-7-29.10 Year Enacted 2006 Year Effective Taxable years beginning on or after January 1, 2006 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: This credit is equal to 30 percent of the federal credit claimed for qualified expenses related to the care of children and dependents. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 34 34 35 (m) Denotes a value of less than $1 million 1.6.008 Adoption of Foster Child Credit State Statute 48-7-29.15 Year Enacted 2008 Year Effective Tax years beginning on or after January 1, 2008 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: Provides an annual tax credit for taxpayers adopting qualified foster children. The value of the credit is $2,000 per child annually until the child attains the age of 18. Applies to adoptions occurring in taxable years beginning on or after January 1, 2008. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 3 4 (m) Denotes a value of less than $1 million 65 | P a g e 1.6.009 Low-Income Credit State Statute 48-7A -3 Year Enacted 1991 Year Effective Taxable years beginning on or after January 1, 1992 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: Provides a tax credit for low-income individuals. The credit is based on the taxpayers AGI. The maximum value of the credit is $26 per dependent. For tax years beginning on January 1, 2010 and after, the credit is nonrefundable State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 7 7 (m) Denotes a value of less than $1 million 1.6.010 Credit for taxes paid to another state State Statute 48-7-28 Year Enacted 1931 Year Effective 1931 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: A resident individual with income taxed by another state is allowed a credit for such tax. The maximum value of this credit is equal to the amount that would be due if the income were taxed by Georgia. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 174 179 185 (m) Denotes a value of less than $1 million 66 | P a g e The following tax credits are offered to both non-corporate businesses filing a personal income tax return and corporations filing a corporate return. The value of the credits claimed by businesses filing individual returns are reported under the corporate tax section of this report. Expenditure 1.6.012 1.6.013 1.6.014 1.6.015 1.6.016 1.6.017 1.6.018 1.6.019 1.6.020 1.6.021 1.6.022 1.6.023 1.6.024 1.6.025 1.6.026 1.6.027 1.6.028 1.6.029 1.6.030 1.6.031 1.6.032 1.6.033 1.6.034 1.6.035 1.6.036 1.6.037 1.6.038 1.6.039 1.6.040 1.6.041 Statute 48-7-40 and 48-740.1 48-7-40.17 48-7-40.24 48-7-40.25 48-7-40.2, 48-7-40.3, and 48-7-40.4 48-7-40.7, 48-7-40.8, and 48-7-40.9 48-7-40.15 48-7-40.15A 48-7-40.26 48-7-40.12 48-7-40.27 & 40.28 48-7-29.13 48-7-29.11 48-7-29.3 48-7-40.22 48-7-40.6 48-7-29.6 48-7-29.8 48-7-40.19 48-7-40.16 48-7-29.12 48-7-29.14 48-7-41 48-7-40.5 48-7-29.16 48-7-40.30 48-7-40.29 48-7-40.10 48-7-40.11 48-7-40.21 Corresponding Corporate Credit Employer's Jobs Tax Credit (2.6.001) Quality Jobs Tax Credit (2.6.002) New Facilities Jobs Credit (2.6.003) New Manufacturing Facilities Property Credit (2.6.004) Manufacturer's Investment Tax Credit (2.6.005) Optional Investment Tax Credit (2.6.006) Port Activity Tax Credit (2.6.007) Alternative Port Activity Tax Credit (2.6.008) Film Tax Credit (2.6.009) Research Tax Credit (2.6.010) Seed-Capital Fund Credit (2.6.011) Qualified Health Insurance Expense Credit (2.6.012) Teleworking Credit (2.6.013) Qualified Transportation Credit (2.6.014) Business Enterprise Vehicle Credit (2.6.015) Employer's credit for providing or sponsoring child care for employees and employer's credit for purchasing child care property (2.6.016) Low Income Housing Credit (2.6.017) Historic Rehabilitation Credit (2.6.018) Diesel Particulate Emission Reduction Technology Equipment Credit (2.6.019) Low/Zero Emission Vehicle Credit & Electric Vehicle Charger Credit (2.6.020) Land Conservation Credit (2.6.021) Clean Energy Property Credit & Wood Residuals Credit (2.6.022) Employer's Credit for Basic Skills Education (2.6.023) Employer's Credit for Approved Employee Retraining (2.6.024) Qualified Education Expense Credit (2.6.025) Qualified Investor Tax Credit (2.6.026) Energy or water efficient equipment credit (2.6.027) Tax credit for water conservation facilities and qualified water conservation investment property (2.6.028) Tax credit for shift from ground water usage (2.6.029) Tax credit for existing business enterprises undergoing qualified business expansion (2.6.030) 67 | P a g e Income tax exemptions for which an estimate is not currently available Expenditure Statute Summary 1.4.006 48-7-27 Certain military income 1.4.009 48-7-27 Certain dependent's unearned income 1.4.011 48-7-27 Salaries and wages reduced from Federal taxable income because of the Federal Jobs Tax Credit 1.4.012 48-7-27 Individual retirement account, Keogh, SEP and Sub-S plan withdrawals where tax has been paid to Georgia because of the difference between Georgia and Federal law for tax years 1981 through 1986. 1.4.013 48-7-27 Depreciation because of differences in Georgia and Federal law during tax years 1981 through 1986. 1.4.014 48-7-27 Income from any fund, program or system which is exempted by federal law or treaty. 1.4.015 48-7-27 Certain income in which the Sub-S election is not recognized by Georgia or another state in order to avoid double taxation. 1.4.016 48-7-27 Adjustment for certain teachers retired from the Teacher's Retirement System of Georgia 1.4.017 48-7-27 Amount claimed by certain employers in food and beverage establishments 1.4.018 48-7-27 Adjustment of certain payments to minority subcontractors 1.4.019 48-7-27 Adjustments to federal AGI for certain Georgia resident partners 68 | P a g e 2. Corporate Income Tax The corporate income tax was first levied in Georgia in 1929. While originally levied at a rate of 1/3 of the federal corporate tax rate, the rate was changed to 4 percent in 1931. The tax has gone through several rate changes since its introduction, including in 1949 when it was temporarily increased to 7.5 percent. The current rate of 6 percent was adopted in 1969. The Georgia corporate income tax does not include a minimum level of exempt income and includes only one income tax bracket. Corporate tax collections for FY2011 were $613 million or 4.0 percent of total state tax revenues. Approximately 203,000 corporate returns were processed for FY2011. All revenue collected from this tax is deposited into the state general fund. The starting point for the construction of the tax base is federal taxable income of a corporation. Several adjustments are made in order to determine Georgia business income. For example, although corporations are allowed certain special depreciation deductions at the federal level, some of these deductions are not allowed at the state level. Firms taking these deductions on their federal return must add these deductions back to their tax base when determining their state taxable income. In addition, firms operating in multiple states must apportion their corporate income to each of the states in which they have a legal obligation to pay the tax. Since 2008 firms with multistate income determine the portion of their total income associated with Georgia by computing their total Georgia receipts relative to their total receipts. It is important to keep in mind that tax expenditure estimates may differ from revenue estimates presented in fiscal notes. As mentioned in the introduction to this report, the value of tax expenditures may differ from the value of revenue estimates provided in fiscal notes because fiscal notes incorporate behavioral effects that are not considered when estimating tax expenditure provisions. This is because the purpose of a tax expenditure estimate is to convey the cost that would be necessary if the item were offered as a direct budgetary expenditure instead of a reduction in the tax liability. A second caveat concerns the estimates associated with the state corporate credit provisions. Forecasting the value of the revenue loss stemming from the use of these credits is problematic because of the presence of extensive carry forwards in the case of some credits. Because of past credit carry forwards, firms may claim credits on current or future year tax returns that were created in prior years. Therefore, the estimates provided in this report should be interpreted as the expected revenue loss stemming from the use of currently created or previously created credits and not an estimate of the value of credits created in a given year. 69 | P a g e 2.1 Federal Corporate Exclusions 2.1.001 Exemption from imputed interest rules Federal Statute IRC Sections 163(e), 483, 1274, and 1274(A) Description: Debt instruments for amounts not exceeding an inflation adjusted maximum, given in exchange for real property, may not have imputed to them an interest rate greater than 9 percent. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.002 Exclusion of interest on state and local government private activity bonds Federal Statute IRC Section 103,141,142 and 146 Description: Interest earned on qualified private activity bonds is tax exempt. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.003 Exclusion of contributions in aid of construction for water and sewer utilities Federal Statute IRC Section 118(c) Description: Qualifying contributions in aid of construction received by regulated water and sewage disposal utilities are not included in the utilities' gross income under certain conditions. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.004 Exclusion of earnings of certain environmental settlement funds Federal Statute IRC Section 468B Description: Under certain conditions, an environmental settlement fund will be exempt from tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.005 Exclusion for certain agricultural cost-sharing payments Federal Statute IRC Section 126 Description: Grants made for the purpose of conserving soil and water resources or protecting the environment are excluded from the recipient's gross income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 70 | P a g e 2.1.006 Exclusion of gain or loss on sale or exchange for brownfield property Federal Statute IRC Section 512 and 514 Description: Qualifying brownfield property that is acquired from an unrelated party, subject to remediation, and sold to another unrelated party is exempt from unrelated business income tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.007 Exclusion of health insurance benefits for military retirees and retiree dependents enrolled in Medicare Federal Statute Rev. Rul. 70-341, IRC Section 139A, Section 112 and 134 Description: Exclusion of health insurance benefits for military retirees and retiree dependents enrolled in Medicare, retiree dependents enrolled in Medicare, and exclusion of certain subsidies to employers who maintain prescription drug plans for Medicare enrollees. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 (m) (m) Denotes a value of less than $1 million 2.1.008 Exclusion of disaster mitigation payments Federal Statute IRC Section 139 Description: Payments made for disaster mitigation under the Robert T. Stafford Disaster Relief and Emergency Insurance Act or the National Flood Insurance Act are excluded from income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.009 Exclusion of interest on public purpose state and local government bonds Federal Statute IRC Sections 103, 141 and 146 Description: Interest income of qualifying governmental bonds is excluded from taxable income. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.1.010 Various foreign provisions (Including inventory property sales source rule exception, interest expense allocation, deferral of active income of controlled foreign corporations, deferral of active financing income) Federal Statute IRC Sections 861-863, 865, 953-954, 864 Description: These provisions provide certain exceptions to the general treatment of foreign sourced income. 71 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 63 58 57 72 | P a g e 2.2 Federal Corporate Deductions 2.2.001 Accelerated depreciation (MACRS) Federal Statute Various Description: Includes - 5 year MACRS for certain energy property, 10 year MACRS for smart electric distribution, 15 year MACRS for certain electric transmission property, 15 year MACRS for natural gas distribution; depreciation of rental housing, buildings other than rental housing, and equipment in excess of alternative depreciation system State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 29 30 31 (m) Denotes a value of less than $1 million 2.2.002 Deduction for expenditures on energy-efficient commercial building property Federal Statute IRC Section 179D Description: This provision provides a formula-based tax deduction for all or part of the cost of energy-efficient commercial building property placed in service after 12/31/2005 and before 1/1/2014. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.003 Deduction of exploration and development costs of nonfuel minerals Federal Statute IRC Sections 263, 291, 616-617,56,1254 Description: Firms engaged in mining are permitted to expense certain exploration and development costs. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.004 Amortization of business startup costs Federal Statute IRC Section 195 Description: This provision allows a business taxpayer to deduct up to $10,000 in qualified start-up expenditures. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.005 Expensing of research and development costs in lieu of R&D tax credit Federal Statute IRC Section 174 Description: This provision allows a business taxpayer to deduct certain research expenditures that are paid or incurred in connection with the taxpayer's trade or business. 73 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 5 6 7 2.2.006 Expensing of magazine circulation expenditures Federal Statute IRC Section 173 Description: In general, current federal tax law allows publishers of newspapers, magazines, and other periodicals to deduct their expenditures to maintain, establish, or increase circulation in the year in which they are made. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.007 Deductions for oil and gas exploration and development costs Federal Statute IRC Sections 611, 612,613,613A and 291; 263(c), 616-617, 57(a)(2), 59(e) and 1254 Description: Firms that extract oil, gas or other minerals are permitted a deduction to recover their capital investment in a mineral reserve, which depreciates due to the physical and economic depletion or exhaustion as the mineral is recovered. Firms engaged in the exploration and development of oil, gas or geothermal properties have the option of expensing certain intangible drilling and development costs. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.008 Special treatment for expenses related to timber production Federal Statute IRC Sections 194, 263A(c)(5) Description: This provision allows expensing of production costs of growing timber. Taxpayers are also allowed different depreciation practices for qualified reforestation expenses. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 2.2.009 Deduction for charitable contributions (includes deductions for health, education, and other than health and education) Federal Statute IRC Sections 170 and 642(c) Description: Subject to certain limitations, charitable contributions may be deducted by individuals. 74 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 12 12 12 2.2.011 Expensing under IRC section 179 of depreciable business property Federal Statute IRC Section 179 Description: Within certain limits, a taxpayer may elect to deduct as a current expense the cost of qualifying property in the tax year when it is placed in service. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 (m) (-m) (m) Denotes a value of less than $1 million 2.2.012 Amortization of air pollution control facilities Federal Statute IRC Section 169(d)(5) Description: This provision allows plants placed in service after 1/1/1976 the option of amortizing investments in pollution control equipment for coal-fired electric generation plants. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 2.2.013 Election to expense 50 percent of qualified property used to refine liquid fuels Federal Statute IRC Section 179C and 168 Description: Taxpayers may elect to expense 50 percent of the cost of qualified refinery property used to process liquid fuel from crude oil and other qualified fuels. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.014 Various agricultural expensing provisions Federal Statute IRC Section 175, 180, 1231 Description: Taxpayers in the business of farming may choose to expense costs associated with soil and water conservation, soil conditioning and the costs associated with raising dairy and breeding cattle. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.015 Community and regional development incentives Federal Statute IRC Sections 38(b), 39(d), 45A, 280C(a), 1391-1397D 75 | P a g e Description: Communities designated as empowerment zones and renewable communities are eligible for special development incentives. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.016 Expensing to remove architectural and transportation barriers to the handicapped and elderly Federal Statute IRC Section 190 Description: This provision allows taxpayers to deduct up to $15,000 of expenses incurred in a single year for removing physical barriers to handicap or elderly individuals in qualified facilities or public transportation vehicles owned or leased by the taxpayer. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.2.017 Inventory methods and valuation Federal Statute IRC Section 475, 491-492 Description: This provision allows taxpayers to use alternative inventory systems to determine cost of goods sold. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 14 15 15 (m) Denotes a value of less than $1 million 76 | P a g e 2.3 Special Federal Corporate Conformity Provisions 2.3.001 Like-kind exchanges Federal Statute IRC Section 1031 Description: When business or investment property is exchanged for property of a "like kind" no gain or loss is recognized on the exchange and therefore no tax is paid at the time of the exchange. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 4 4 5 (m) Denotes a value of less than $1 million 2.3.002 Special rules for magazine, paperback book, and record returns Federal Statute IRC Section 458 Description: Publishers and distributors of magazines, paperbacks, and records may elect to exclude from gross income for a tax year, the income from the sale of goods that are returned after the close of the tax year. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.3.003 5 year carryback for net operating losses attributable to farming Federal Statute IRC Section 172 Description: Current law provides a 5 year carryback period for losses related to farming. The normal carryback period for losses is two years. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.3.004 Special rules for mining reclamation reserves Federal Statute IRC Section 468 Description: Electing taxpayers may deduct the current value equivalent of certain estimated future reclamation and closing costs for mining and solid waste disposal sites. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.3.005 Cash accounting, other than agriculture Federal Statute IRC Sections 446 and 448 Description: The cash method of accounting may be used by any business taxpayer that is not a tax shelter and falls into at least one of three specified categories. 77 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) 2.3.006 Deferral of gain on non-dealer installment sales Federal Statute IRC Sections 453 and 453A(b) Description: Some taxpayers are allowed to report some sales using the installment method of accounting in which the gross profit from the sale is prorated over the years during which the payments are received. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 11 15 15 (m) Denotes a value of less than $1 million 2.3.007 Completed contract rules Federal Statute IRC Section 460 Description: Some taxpayers with construction or manufacturing contracts extending for more than one tax year are allowed to report some or all of the profit on the contracts under special accounting rules rather than the normal rules of tax accounting. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 3 3 (m) Denotes a value of less than $1 million 2.3.008 Special treatment of employee stock ownership plans (ESOPs) Federal Statute IRC Sections 401(a)(28), 404(a)(9), 404(k), 415(c)(6),1042,497(e)(7), 4978,4979A, 422-423 Description: ESOPs are provided with special tax treatment. Employer contributions may be deducted as a business expense. In addition, some contributions are subject to less restrictive limits than contributions to other employee benefit plans. Tax on qualified employee stock purchase plans are not taxed when granted or excised. Tax is deferred until stock is sold. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure -1 -1 -1 (m) Denotes a value of less than $1 million 2.3.009 Deferral of capital construction costs of shipping companies Federal Statute IRC Section 7518 Description: U.S. operators of vessels in foreign, Great Lakes, or noncontiguous domestic trade, or in U.S. fisheries, may establish a capital construction fund into which they may make certain tax deductible deposits. In addition, the earnings on the deposits are tax deferred. 78 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) 79 | P a g e 2.4 Corporate Apportionment Discussed below are three issues relating to corporate apportionment that can be considered tax expenditures because they are deviations from the standard practice of corporate apportionment and result in a benefit to some taxpayers. No estimate of the value of these expenditures is available at this time. 2.4.001 Single Factor Apportionment With single factor apportionment, firms determine state tax liability based solely on the ratio of Georgia receipts to total receipts. The traditional apportionment formula involves the use of three Georgia-total ratios: property, payroll, and receipts. With the 3 factor formula the firm applies a weight of 33.33 percent to each ratio. The single factor formula benefits firms that have manufacturing presence in one state but significant sales outside of the state. Firms that are located and operate in a single state are not affected by the apportionment formula. 2.4.002 Throwback Rule Under a throwback rule, out-of-state sales from a corporation are taxed by the state of origin if the corporation has no nexus in the destination state. At least 25 states have a throwback rule. Georgia, North Carolina, Florida, Tennessee, South Carolina, and Virginia do not but Alabama does. An alternative rule is the "throwout rule" which eliminates sales to non-nexus states from both the numerator and denominator of the apportionment formula of a corporation. Georgia does not have a throwout rule. 2.4.003 Corporate Receipts Sourcing Georgia is among 12 states that apportion multistate corporate income based only on gross receipts, (i.e. a 100% sales factor). This creates a destination-based corporate income tax system. Under this approach, corporations pay taxes based on the state in which their products are sold, not where production takes place. This rule applies to the sale of tangible property. When considering apportionment for services provided across state lines, Georgia employs a market-based sourcing rule. At the present, there is no consensus between the states on how to define a "market" for the purpose of implementing this rule but, in general, it means that services will be taxed based on the state in which the customer receives the benefit. The rule is meant to apply a consistent destination-based treatment to services when compared to tangible goods. 80 | P a g e Corporate apportionment expenditures for which an estimate is not currently available Expenditure Statute 2.4.001 48-7-31 Summary Single factor apportionment 2.4.002 Not applicable Throwback Rule 2.4.003 48-7-31(d)(2)(A)(i) & Georgia Revenue Rules & Regulations 560-7-7-.03(5)(c)1 Corporate receipts sourcing 81 | P a g e 2.5 Georgia Deductions Corporate income tax deductions for which an estimate is not currently available Expenditure Statute Summary 2.5.001 48-7-21 Interest on obligations of United States 2.5.002 48-7-21 Exception to intangible expenses and related interest cost 82 | P a g e 2.6 Georgia Credits 2.6.001 Employer's Job Tax Credit State Statute 48-7-40 and 48-7-40.1 Year Enacted 48-7-40: 1989; 48-7-40.1: 1993 Year Effective 48-7-40: Taxable years beginning on or after January 1, 1990; 48-7-40.1: Taxable years beginning on or after January 1, 1994. Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Estimate includes tax credit for expanding business (2.6.030) and the new facilities job credit (2.6.003); this estimate differs from earlier reports due to newly available data. Description: The credit provides a statewide job tax credit to any business or headquarters engaged in manufacturing, warehousing and distribution, processing, telecommunications, broadcasting, tourism, or research and development. Retail establishments are only allowed the credit if located in one of the 40 least developed counties of the state. Average wages must be greater than the average wage of the county in the state with the lowest average wage. To be eligible, employers must offer health insurance to all new employees. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 39 44 48 (m) Denotes a value of less than $1 million 2.6.002 Quality Jobs Tax Credit State Statute 48-7-40.17 Year Enacted 2009 Year Effective Taxable years beginning on or after January 1, 2009 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note Description: This credit is for employers creating new high-wage jobs or relocating high-wage jobs into the state. A quality job or high-wage job is defined as a job located in the state; has 30 hours a week of regular work; a job that is not already located in Georgia; and pays at or above 110 percent of the average wage of the county in which it is located. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 4 5 (m) Denotes a value of less than $1 million 83 | P a g e 2.6.003 New Facilities Jobs Credit State Statute 48-7-40.24 Year Enacted 2003 Year Effective Latest modifications are effective for taxable years beginning on or after January 1, 2009 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: For business enterprises that first qualified in a taxable year beginning before January 1, 2009, $450 million in qualified investment property must be purchased for the project within a six-year period. The manufacturer must also create at a minimum 1,800 new jobs within a six-year period and can receive credit for up to a maximum of 4,500 jobs. For business enterprises who first qualify in a taxable year beginning on or after January 1, 2009, the business enterprise must meet the job creation requirement of 1,800 eligible full-time employees and either the qualified investment requirement of $450 million in qualified investment property, or the payroll requirement of $150 million in total annual Georgia W-2 reported payroll within the six-year period. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure Included in 2.6.001 (m) Denotes a value of less than $1 million 2.6.005 Manufacturer's Investment Tax Credit State Statute 48-7-40.2, 48-7-40.3, and 48-7-40.4 Year Enacted 1994 Year Effective Taxable years beginning on or after January 1, 1994 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: Taxpayer must invest a minimum of $50,000 per project per location during the tax year to receive credit. Eligible taxpayers must have been in operation for the immediately preceding three years. Leased property for a period of 5 years or longer is eligible for the credit. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 8 9 (m) Denotes a value of less than $1 million 2.6.006 Optional Investment Tax Credit State Statute 48-7-40.7, 48-7-40.8, and 48-7-40.9 Year Enacted 1995 Year Effective Taxable years beginning on or after January 1, 1996. 84 | P a g e Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: An alternative investment tax credit available for investments in manufacturing or telecommunications facilities or support facilities that has been operating for the three immediately preceding years. The credit is available for investments in excess of $5 million and placed in service no earlier than January 1, 1996 for Tier 1 counties. The investment threshold is $10 million for Tier 2 counties and is $20 million for Tier 3 and 4 counties. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 2.6.007 Port Activity Tax Credit State Statute 48-7-40.15 Year Enacted 1998 Year Effective Latest modifications apply to taxable years beginning on or after January 1, 2010 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Estimate combined with 2.6.008 Description: For taxable years beginning before January 1, 2010, businesses or the headquarters of any such businesses engaged in manufacturing, warehousing and distribution, processing, telecommunications, broadcasting, tourism, or research and development that have increased shipments out of Georgia ports during the previous 12-month period by more than 10% over their 1997 base year port traffic, or by more than 10% over 75 net tons, five containers or ten 20-foot equivalent units (TEU's) during the previous 12-month period are qualified for increased job tax credits or investment tax credits. For taxable beginning on or after January 1, 2010, the increase is based on a comparison of the previous 12 month period to the second preceding 12 month period. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 7 7 (m) Denotes a value of less than $1 million 2.6.008 Alternative Port Activity Tax Credit State Statute 48-7-40.15A Year Enacted 2009 Year Effective 2009 Data Source DOR Data for 2010 85 | P a g e Estimate Reliability Class A Data Reliability Class A Note Estimate combined with 2.6.007 Description: Credit is allowed to any business enterprise located in a Tier 2 or 3 county or in a less developed area and which qualifies and receives the Jobs Tax Credit and which 1. Consists of a distribution facility of greater than 650,000 square feet in operation in this state prior to December 31, 2008; 2. Distributes product to retail stores owned by the same legal entity or its subsidiaries as such distribution facility; and 3. Has a minimum of 8 retail stores in this state in the first year of operations. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure Included in 2.6.007 (m) Denotes a value of less than $1 million 2.6.009 Film Tax Credit State Statute 48-7-40.26 Year Enacted 2005 Year Effective Taxable years beginning on or after January 1, 2005 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class A Note This estimate differs from earlier reports due to newly available data. Description: Production companies which have at least $500,000 of qualified expenditures in a state certified production may claim this credit. Certification must be approved through the Georgia Department of Economic Development. There are special calculation provisions for production companies whose average annual total production expenditures in this state exceeded $30 million for 2002, 2003 and 2004. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 65 75 86 (m) Denotes a value of less than $1 million 2.6.010 Research Tax Credit State Statute 48-7-40.12 Year Enacted 1997 Year Effective Taxable years beginning on or after January 1, 1998 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: This credit is for expenses resulting from research conducted in 86 | P a g e Georgia by businesses engaged in manufacturing, warehousing and distribution, processing, telecommunications, tourism, or research and development industries. A tax credit is allowed provided that the business enterprise for the same taxable year claims and is allowed a research credit under Section 41 of the Internal Revenue Code of 1986, as amended. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 8 10 13 (m) Denotes a value of less than $1 million 2.6.011 Seed-Capital Fund Credit State Statute 48-7-40.27 & 40.28 Year Enacted 2008 Year Effective Applicable to investments made on or after July 1, 2008 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: This provides a tax credit for certain qualified investments made on or after July 1, 2008 in a research fund, the purpose of which is to provide early-stage financing for businesses formed as a result of research conducted in Georgia's research universities. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.6.012 Qualified Health Insurance Expense Credit State Statute 48-7-29.13 Year Enacted 2008 Year Effective Taxable years beginning on or after January 1, 2009 Data Source DOR Data for 2010, America's Health Insurance Plan, Center for Policy and Research Estimate Reliability Class A Data Reliability Class A Note Description: Employer credit for the premiums paid for a high-deductible health plan. Employers must employ 50 or fewer persons for whom the employer provides high deductible health plans as defined by Section 223 of the Internal Revenue Code and in which such employees are enrolled. The qualified health insurance must be made available to all employees and compensated individuals of the employer pursuant to the applicable provisions of Section 125 of the Internal Revenue Code. The qualified health insurance premium expense must equal at least $250 annually. 87 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) 2.6.013 Teleworking Credit (expired 12/31/2011) State Statute 48-7-29.11 Year Enacted 2006 Year Effective July 1, 2007 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note This credit expired 12/31/2011 Description: Employers who permit their employees to telework will be allowed an income tax credit for expenses incurred up to $1,200 per participating employee. In addition, employers are allowed a one-time credit of $20,000 per employer for preparing an assessment of a teleworking plan for their business. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 0 0 (m) Denotes a value of less than $1 million 2.6.014 Qualified Transportation Credit State Statute 48-7-29.3 Year Enacted 1999 Year Effective Taxable years beginning on or after January 1, 2001 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: A tax credit provided to employers for the cost of providing any federally qualified transportation benefit to an employee. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.6.015 Business Enterprise Vehicle Credit State Statute 48-7-40.22 Year Enacted 2001 Year Effective Taxable years beginning on or after January 1, 2002. Data Source Georgia Regional Transportation Authority Estimate Reliability Class C Data Reliability Class A Note 88 | P a g e Description: This is a credit given to a business enterprise for the purchase of a motor vehicle that is used exclusively to provide transportation for its employees. In order to qualify, a business enterprise must certify that each vehicle carries an average daily ridership of not less than four employees for an entire taxable year. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.6.016 Employer's Credit for providing or sponsoring child care for employees and employer's credit for purchasing child care property State Statute 48-7-40.6 Year Enacted 1994 & 1999 Year Effective Credit for cost of operation-Taxable years beginning on or after January 1, 1994; Credit for Cost of Qualified Child Care Property-Taxable years beginning on or after January 1, 2000. Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: Tax credit for expenses related to an employer who purchases qualified child care property; and a tax credit for employers who provide or sponsor child care for employees. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 8 9 10 (m) Denotes a value of less than $1 million 2.6.017 Low Income Housing Credit State Statute 48-7-29.6 Year Enacted 2000 Year Effective Taxable years beginning on or after January 1, 2001. Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class A Note Description: This is a credit against Georgia income taxes for taxpayers owning developments which receive the federal Low-Income Housing Tax Credit and that are placed in service on or after January 1, 2001. A eligible development consists of a housing project with restricted rents that do not exceed 30 percent of median income for at least 40 percent of its units occupied by persons or families having incomes of 60 percent or less of the median income or at least 20 percent of the units occupied by persons or families having incomes of 50 percent or less of the median income. 89 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 33 36 39 2.6.018 Historic Rehabilitation Credit State Statute 48-7-29.8 Year Enacted 2002 Year Effective Taxable years beginning on or after January 1, 2004 Data Source DOR Data for 2010 and U.S. Joint Committee on Taxation Estimate Reliability Class B Data Reliability Class A Note Description: A credit for the certified rehabilitation of a certified structure or historic home. Standards set by the Georgia Department of Natural Resources must be met. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.6.019 2.6.020 Diesel Particulate Emission Reduction Technology Equipment Credit State Statute 48-7-40.19 Year Enacted 2000 Year Effective Taxable years beginning on or after January 1, 2001. Data Source Officials from the Georgia Air Protection Branch of the Georgia Department of Natural Resources Estimate Reliability Class A Data Reliability Class A Note Description: This is a credit given to any person who installs diesel particulate emission reduction equipment at any truck stop, depot, or other facility. For purposes of this credit diesel particulate emission reduction technology equipment is any equipment that provides for heat, air conditioning, light, and communications for the driver's compartment of a commercial motor vehicle parked at a truck stop, depot, or other facility the use of which results in the engine being turned off with a corresponding reduction of particulate emissions from such vehicle's diesel engine. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million Zero and Low Emission Vehicle Credit; Electric Vehicle Charger Credit State Statute 48-7-40.16 90 | P a g e Year Enacted 1998 Year Effective Taxable years beginning on or after January 1, 1998 Data Source DOR Data for 2010, U.S. Energy Information Administration, and U.S. Department of Energy Estimate Reliability Class B Data Reliability Class A Note Description: This is a credit for the purchase or lease of a new low or zero emission vehicle that is registered in the state of Georgia. The credit also applies to the conversion of a standard vehicle to a low or zero emission vehicle. In addition, the credit applies to the purchase of an electric vehicle charger. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 4 4 (m) Denotes a value of less than $1 million 2.6.021 Land Conservation Credit State Statute 48-7-29.12 Year Enacted 2006 Year Effective Taxable years beginning on or after January 1, 2006 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: This is an income tax credit for the qualified donation of real property that qualifies as conservation land pursuant to Chapter 22 of Title 36. Property donated to increase building density levels or property that will be used or is associated with the playing of golf shall not be eligible. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 19 30 34 (m) Denotes a value of less than $1 million 2.6.022 Clean Energy Property & Wood Residuals Credit State Statute 48-7-29.14 Year Enacted 2008 Year Effective July 1, 2008 Data Source DOR Data for 2012 Estimate Reliability Class A Data Reliability Class A Note Description: The Georgia Clean Energy Property and Wood Residuals tax credit includes two general types of income tax credits: 1) investments in the construction, purchase or lease of "clean energy property," and 2) the 91 | P a g e value of "wood residuals" delivered to a qualified renewable biomass facility. The clean energy property tax credits apply to solar, wind and energy efficiency projects, geothermal heat pumps, and certain biomass equipment for making electricity. For the purposes of the wood residuals tax credit, wood residuals include urban wood waste, land clearing residues, and pellets, but not wood from a U.S. national forest. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 3 3 (m) Denotes a value of less than $1 million 2.6.023 Employer's Credit for Basic Skills Education State Statute 48-7-41 Year Enacted 1991 Year Effective 1991 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: A tax credit is provided to employers that sponsor or provide, at no cost to their employees, an approved basic skills education program. A basic skills education is one that enhances reading, writing, or mathematical skills up to and including the twelfth grade. Employee means any employee resident in Georgia who is employed for at least 24 hours a week and who has been continuously employed by the employer for at least 16 consecutive weeks. Eligible expenses include instructor salaries, materials, supplies, and textbooks but exclude costs associated with renting or otherwise securing space. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 2.6.024 Employer's Credit for Approved Employee Retraining State Statute 48-7-40.5 Year Enacted 1994 Year Effective Latest modifications are effective for taxable years beginning on or after January 1, 2009 Data Source DOR Data for 2010 Estimate Reliability Class B Data Reliability Class B Note This estimate differs from earlier reports due to newly available data. Description: The tax credit reimburses employers for the cost of providing retraining services to their employees. As of January 1, 2009, retraining programs shall not include any retraining on commercially, mass 92 | P a g e produced software packages for word processing, data base management, presentations, spreadsheets, e-mail, personal information management, or computer operating systems except a retraining tax credit shall be allowable for those providing support or training on such software. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 19 25 29 (m) Denotes a value of less than $1 million 2.6.025 Qualified Education Expense Credit State Statute 48-7-29.16 Year Enacted 2008 Year Effective Taxable years beginning on or after January 1, 2008 Data Source DOR Data for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: This provides a tax credit for donations made by taxpayers to a student scholarship organization which are used for tuition and fees for a qualified school or program. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 51 52 53 (m) Denotes a value of less than $1 million 2.6.026 Qualified Investor's Tax Credit State Statute 48-7-40.30 Year Enacted 2010 Year Effective January 1, 2011 Data Source Fiscal Note for HB 1001/2010 LC 18 8790 Estimate Reliability Class A Data Reliability Class A Note Description: This credit provides a 35% tax credit for amounts invested in certain Georgia headquartered small businesses. The credit is available for investments made in 2011, 2012 and 2013 but the credit cannot be claimed until FY2014 at the earliest. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 0 0 7 (m) Denotes a value of less than $1 million 2.6.027 Energy or Water Efficient Equipment Credit State Statute 48-7-40.29 Year Enacted 2010 93 | P a g e Year Effective January 1 of the year following the year in which federal funds for this program are made available and received by the state Data Source Fiscal Note for HB 1069/2010 LC 21 0586 Estimate Reliability Class A Data Reliability Class A Note Description: This tax credit applies to taxpayers who purchase energy efficient and water conservation equipment. The value of the credit is equal to 25 percent of the cost of the qualified equipment or $2,500, whichever is less. The credit is only available for those tax years in which federal funds are made available to the state for this purpose. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 0 0 0 (m) Denotes a value of less than $1 million 2.6.030 Tax credit for existing business enterprises undergoing qualified business expansion State Statute 48-7-40.21 Year Enacted Year Effective Latest modifications are applicable to tax years beginning on or after January 1, 2008 Data Source Estimate Reliability Not Applicable Data Reliability Note Estimate included in Provision 2.6.001 Description: This credit applies to businesses that create at least 500 new full-time jobs within a taxable year. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure Included in 2.6.001 (m) Denotes a value of less than $1 million Corporate income tax credits for which an estimate is not currently available Expenditure Statute Summary 2.6.004 2.6.028 48-7-40.25 48-7-40.10 New Manufacturing Facilities Property Credit Tax credit for water conservation facilities and qualified water conservation investment property 2.6.029 48-7-40.11 Tax credit for shift from ground-water usage 94 | P a g e 3. Corporate Net Worth Tax Georgia imposes a tax on the net worth of corporations. The net worth of foreign corporations subject to the Georgia tax is based upon the ratio of assets in Georgia and gross receipts in Georgia to total assets and gross receipts. Revenues from this tax totaled $31 million in FY2011. All revenues from this tax are deposited into the state general fund. The tax is graduated based upon the taxable net worth of the corporation. The minimum liability is $10 for corporations having $10,000 or less in taxable net worth. The maximum liability is $5,000 for corporations with taxable net worth of more than $22 million. Corporate net worth tax expenditures for which an estimate is not currently available Expenditure Statute Summary 3.001 48-13-72 Exemption for nonprofit corporations 3.002 48-13-72 Exemption for insurance companies 95 | P a g e 4. Sales and Use Tax The sales and use tax was first enacted in Georgia in 1951 at a rate of 3 percent. The rate was increased to its current rate of 4 percent in 1989. In FY2011 the sales and use tax generated $5.1 billion and accounted for approximately 33 percent of state tax revenues. All proceeds from the sales and use tax net of the vendor commission are deposited into the state general fund. The base consists of retail sales, leases, rentals, use on consumption of tangible personal property. In addition to the state sales tax, local governments are authorized to impose a 1 to 3 percent sales tax with a few exceptions. The local sales taxes in most counties consist of a combination of a Local Option sales tax (LOST), Special Purpose Local Option sales tax (SPLOST) and/or an Educational Special Purpose Local Option sales tax (E-SPLOST). In addition, Atlanta also levies another 1 percent sales tax to cover expenses related to sewer repairs and two counties levy a Homestead Option sales tax (HOST). In general, these local taxes operate from the same sales tax as the state sales tax; the major exception being food for home consumption which is included in the local sales tax base, but not in the state base. The sales tax is remitted to the Department of Revenue by the retailer. The use tax is remitted by the consumer. For purposes of this report, the base of taxation for the sales and use tax is defined to include mainly tangible personal property. For example, food for home consumption consists of tangible property that is not included in the sales tax base at the state level and is listed as a state sales tax exemption. On the other hand, all or most services are also excluded from the state and local tax base. We provide estimates of some services that are indirectly exempt from the sales tax. 4.00300 Federal retailer's excise tax if separately itemized to the consumer and Georgia motor fuel tax imposed on the sale of motor fuel State Statute 48-8-3(3) Year Enacted 1951 Year Effective 1951 Data Source U.S. Energy Information Administration Estimate Reliability Class C Data Reliability Class A Note Description: Federal retailer's excise tax if separately itemized to the consumer and Georgia motor fuel tax imposed on the sale of motor fuel State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 4 4 4 Local Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 96 | P a g e 4.00400 Sales of transportation furnished by a county or municipal public transit system or public transit authorities State Statute 48-8-3(4) Year Enacted 1968 Year Effective 1968 Data Source MARTA Annual Report Estimate Reliability Class B Data Reliability Class A Note Estimate combined with 4.00500 Description: Sales by counties and municipalities arising out of their operation of any public transit facility and sales by public transit authorities or charges by counties, municipalities, or public transit authorities for the transportation of passengers upon their conveyances. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 6 6 6 Local Tax Expenditure 4 4 4 (m) Denotes a value of less than $1 million 4.00500 Sales of transportation furnished by an approved and authorized urban transit system State Statute 48-8-3(5) Year Enacted 1970 Year Effective 1970 Data Source MARTA Annual Report Estimate Reliability Class A Data Reliability Class A Note Estimate combined with 4.00400 Description: Fares and charges, except charges for charter or sightseeing service, collected by an urban transit system for the transportation of passengers. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure Included in 4.00400 Local Tax Expenditure (m) Denotes a value of less than $1 million 4.00600 Sales to any Hospital Authority created by Georgia law State Statute 48-8-3(6) Year Enacted 1976 Year Effective 1976 Data Source Georgia Office of Planning and Budget and IRS 990 Form Data Estimate Reliability Class B Data Reliability Class B Note Estimate combined with 4.00700 Description: Sales to any hospital authority created by Article of Chapter 7 of Title 31 97 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 Included in 4.00700 4.00610 Sales to any Housing Authority created by Georgia law State Statute 48-8-3(6.1) Year Enacted 1999 Year Effective 1999 Data Source Georgia Department of Community Affairs and The American Community Survey Estimate Reliability Class C Data Reliability Class A Note Description: Sales to any Housing Authority created by Article 1 of Chapter 3 of Title 8, the Housing Authorities Law. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 Local Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 4.00620 Sales to local government authorities created on or after January 1, 1980 for the principal purpose of constructing, owning, or operating a coliseum and related facilities State Statute 48-8-3(6.2) Year Enacted 2002 Year Effective 2002 Data Source Georgia Department of Community Affairs Estimate Reliability Class B Data Reliability Class B Note Description: Sales to local government authorities created on or after January 1, 1980 for the principal purpose of constructing, owning, or operating a coliseum and related facilities State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.00630 Sales to any agricultural commission created by the Department of Agriculture State Statute 48-8-3(6.3) Year Enacted 2002 Year Effective 2002 Data Source Georgia Department of Agriculture and the Georgia 98 | P a g e Office of Planning and Budget Estimate Reliability Class C Data Reliability Class C Note Description: Sales to any agricultural commission created by the Department of Agriculture State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.00700 Sales of tangible personal property and services to an approved nursing home, inpatient hospice, general hospital or mental hospital when used specifically in the treatment function. State Statute 48-8-3(7) Year Enacted 1971 Year Effective 1971 Data Source DOR Data for 2009 and IRS 990 Form Data Estimate Reliability Class B Data Reliability Class B Note Estimate combined with 4.00600; this estimate differs from earlier reports due to newly available data. Description: Sales of tangible personal property and services to an approved nursing home, inpatient hospice, general hospital or mental hospital when used specifically in the treatment function. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 82 85 87 Local Tax Expenditure 62 63 65 (m) Denotes a value of less than $1 million 4.00710 Sales of tangible personal property and services to a nonprofit organization whose primary function is to provide services to persons with intellectual disabilities. State Statute 48-8-3(7.1) Year Enacted 2001 Year Effective 2002 Data Source U.S. Economic Census and American Community Survey Estimate Reliability Class C Data Reliability Class A Note Description: Sales of tangible personal property and services to a nonprofit organization, the primary function of which is the provision of services to mentally retarded persons, when such organization is a tax exempt organization under the Internal Revenue Code and obtains an exemption determination letter from the state revenue commissioner 99 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 2 2 2 1 1 1 4.00720 Sales to Georgia Society of the Daughters of the American Revolution State Statute 48-8-3(7.2) Year Enacted 2002 Year Effective 2002 Data Source IRS 990 Form Data Estimate Reliability Class C Data Reliability Class C Note Description: Sales of tangible personal property or services to any chapter of the Georgia State Society of the Daughters of the American Revolution which is tax exempt under IRS Code Section 501(c)(3) and obtains an exemption determination letter from the state revenue commissioner. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.00800 Sales of tangible personal property and services to the University System of Georgia and its educational units. State Statute 48-8-3(8) Year Enacted 1963 Year Effective 1963 Data Source University System of Georgia Annual Financial Report for 2010 Estimate Reliability Class B Data Reliability Class A Note This estimate differs from earlier reports due to newly available data. Description: Sales of tangible personal property and services to the University System of Georgia and its educational units. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 29 30 31 Local Tax Expenditure 20 20 21 (m) Denotes a value of less than $1 million 4.01000 Sales of tangible personal property and services used exclusively in the educational function of an approved private elementary or secondary school State Statute 48-8-3(10) Year Enacted 1968 100 | P a g e Year Effective 1968 Data Source The National Center for Education Statistics and the Georgia Department of Education Estimate Reliability Class C Data Reliability Class C Note Description: Sales of tangible personal property and services used exclusively in the educational function of an approved private elementary or secondary school State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 Local Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 4.01200 School lunches sold and served to pupils and employees of public schools State Statute 48-8-3(12) Year Enacted 1953 Year Effective 1953 Data Source Georgia School Nutrition Association and the Georgia Department of Education Estimate Reliability Class B Data Reliability Class B Note Description: School lunches sold and served to pupils and employees of public schools State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 8 8 8 Local Tax Expenditure 6 6 6 (m) Denotes a value of less than $1 million 4.01300 School lunches sold and served to pupils and employees of approved private schools State Statute 48-8-3(13) Year Enacted 1967 Year Effective 1967 Data Source Georgia School Nutrition Association and the National Center of Education Statistics Estimate Reliability Class B Data Reliability Class B Note Description: School lunches sold and served to pupils and employees of approved private schools 101 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) (m) (m) (m) 4.01400 Sales of art and other artifacts for display or exhibition to museums State Statute 48-8-3(14) Year Enacted 1973 Year Effective 1973 Data Source U.S. Economic Census and IRS 990 Form Data Estimate Reliability Class C Data Reliability Class B Note Description: Sales of art and of anthropological, archeological, geological, horticultural, or zoological objects or artifacts and other similar tangible personal property to or for the use by any museum or organization which is tax exempt under section 501(c)(3) of the Internal Revenue Code of such tangible personal property for display or exhibition in a museum within this state State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.01500 Specific fundraising sales by any religious institution lasting no more than 30 days in a calendar year. State Statute 48-8-3(15) Year Enacted 1953 Year Effective 1953 Data Source The National Center for Charitable Statistics Estimate Reliability Class C Data Reliability Class B Note Description: Sales of any religious paper in this state when the paper is owned and operated by religious institutions or denominations and no part of the net profit from the operation of the institution or denomination inures to the benefit of any private person. When the number of days upon which the fundraising activity occurs does not exceed 30 in any calendar year. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 102 | P a g e 4.01510 Sales of pipe organs or steeple bells to any church qualifying as a nonprofit State Statute 48-8-3(15.1) Year Enacted 2001 Year Effective 2001 Data Source The Atlanta Chapter for The American Guild of Organists Estimate Reliability Class C Data Reliability Class C Note Description: Sales of pipe organs or steeple bells to any church qualifying as a nonprofit State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.01700 Sales of fuel or consumable supplies used by ships engaged in inter-coastal or foreign commerce State Statute 48-8-3(17) Year Enacted 1951 Year Effective 1951 Data Source U.S. Energy Information Administration, U.S. Department of Energy Estimate Reliability Class B Data Reliability Class A Note Description: Sales of fuel or consumable supplies used by ships engaged in inter- coastal or foreign commerce State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 23 23 23 Local Tax Expenditure 16 16 16 (m) Denotes a value of less than $1 million 4.02000 Water delivered through water mains, lines, or pipes. State Statute 48-8-3(20) Year Enacted 1966 Year Effective 1966 Data Source The Bureau of Labor Statistics Consumer Expenditure Survey Estimate Reliability Class C Data Reliability Class C Note Description: The sale of water delivered to consumers through water mains, lines, or pipes 103 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 See expenditure estimate for Residential Utilities Service (4.50009) 4.02200 Professional, insurance or personal service transactions which involve sales as inconsequential elements for which no separate charge is made State Statute 48-8-3(22) Year Enacted 1951 Year Effective 1951 Data Source US Economic Census Estimate Reliability Class C Data Reliability Class C Note Description: Professional, insurance or personal service transactions which involve sales as inconsequential elements for which no separate charge is made State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure See expenditure estimate for Local Tax Expenditure services (4.50003, 4.50010, 4.50011) (m) Denotes a value of less than $1 million 4.02300 Repair services when a separate charge is made to the customer State Statute 48-8-3(23) Year Enacted 1951 Year Effective 1951 Data Source US Economic Census Estimate Reliability Class C Data Reliability Class C Note Description: Repair services when a separate charge is made to the customer. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure See expenditure estimates for Local Tax Expenditure Services (4.50003, 4.50010, 4.50011) (m) Denotes a value of less than $1 million 4.02500 Sale of seed, fertilizer, fungicide, and certain other agricultural chemicals to farmers, and feed for livestock, fish, or poultry purchased by persons engaged in animal husbandry (expires January 1, 2013) State Statute 48-8-3(25) Year Enacted 1963 Year Effective 1963 Data Source U.S. Census of Agriculture Estimate Reliability Class B 104 | P a g e Data Reliability Class A Note Description: Sale of seed, fertilizer, fungicide, and certain other agricultural chemicals to farmers, and feed for livestock, fish, or poultry purchased by persons engaged in animal husbandry (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 150 80 0 Local Tax Expenditure 104 56 0 (m) Denotes a value of less than $1 million 4.02600 Sale of machinery used exclusively for irrigation of crops to persons primarily engaged in producing farm crops for sale (expires January 1, 2013) State Statute 48-8-3(26) Year Enacted 2000 Year Effective 2000 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Sale of machinery used exclusively for irrigation of crops to persons primarily engaged in producing farm crops for sale (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 (m) 0 Local Tax Expenditure (m) (m) 0 (m) Denotes a value of less than $1 million 4.02700 Sales of sugar for use as food to honey bee producers (expires January 1, 2013) State Statute 48-8-3(27) Reserved Year Enacted 1964 Year Effective 1964 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Sales of sugar for use as food to honey bee producers (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) 0 Local Tax Expenditure (m) (m) 0 (m) Denotes a value of less than $1 million 105 | P a g e 4.02800 Sale of cattle, hogs, sheep, horses, poultry, or bees when sold for breeding purposes (expires January 1, 2013) State Statute 48-8-3(28) Year Enacted 1964 Year Effective 1964 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Sale of cattle, hogs, sheep, horses, poultry, or bees when sold for breeding purposes (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 1 0 Local Tax Expenditure 1 (m) 0 (m) Denotes a value of less than $1 million 4.02900 Sale of certain types of agricultural machinery (expires January 1, 2013) State Statute 48-8-3(29) Year Enacted 1971 Year Effective 1972 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Sale of certain types of agricultural machinery (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 33 17 0 Local Tax Expenditure 23 12 0 (m) Denotes a value of less than $1 million 4.02910 Off-road equipment and related attachments used exclusively in site preparation, planting, cultivating, or harvesting of timber by persons primarily engaged in growing or harvesting timber (expires January 1, 2013) State Statute 48-8-3(29.1) Year Enacted 1994 Year Effective 1994 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Off-road equipment and related attachments used exclusively in site preparation, planting, cultivating, or harvesting of timber by persons primarily engaged in growing or harvesting timber (expires January 1, 2013) 106 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 12 6 0 8 4 0 4.03000 Vehicles purchased by service-connected disabled veterans when the U.S. Dept. of Veterans Affairs supplies a grant to purchase the specially adapted vehicle State Statute 48-8-3(30) Year Enacted 1972 Year Effective 1972 Data Source The American Community Survey and Fiscal Note for HB 259/2011 LC 5481 Estimate Reliability Class B Data Reliability Class B Note Description: The sale of a vehicle to a service-connected disabled veteran when the veteran received a grant from the United States Department of Veterans Affairs to purchase and specially adapt the vehicle to the veteran's disability State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.03310 Partial sales tax exemption for jet fuel sold to or used by a qualifying airline at a qualifying airport State Statute 48-8-3(33.1); 48-9-3 Year Enacted 2011 Year Effective 2011 Data Source Fiscal Note for HB 386 LC 34 3474S Estimate Reliability Class A Data Reliability Class A Note This estimate differs from previous versions due to new information Description: Partial sales tax exemption for jet fuel sold to or used by a qualifying airline at a qualifying airport. At the local level this exemption only applies to the special purpose local option sales tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 20 21 22 Local Tax Expenditure 5 5 5 107 | P a g e 4.03400 Certain machinery used in the manufacturing of tangible personal property (expires January 1, 2013) State Statute 48-8-3(34) Year Enacted 1963 Year Effective 1963 Data Source U.S. Economic Census Estimate Reliability Class B Data Reliability Class A Note Description: Certain machinery used in the manufacturing of tangible personal property (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 175 90 0 Local Tax Expenditure 121 62 0 (m) Denotes a value of less than $1 million 4.03410 Machinery and equipment used to handle, move, or store tangible personal property in certain distribution facilities State Statute 48-8-3(34.1) Year Enacted 1994 Year Effective 1994 Data Source 2004 Economic Development Report Estimate Reliability Class C Data Reliability Class C Note Description: Machinery and equipment used to handle, move, or store tangible personal property in certain distribution facilities State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 Local Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 4.03420 Machinery and equipment used directly to remanufacture certain aircraft engines or aircraft engine parts State Statute 48-8-3(34.2) Year Enacted 1996 Year Effective 1996 Data Source U.S. Economic Census Estimate Reliability Class B Data Reliability Class A Note Description: Machinery and equipment used directly to remanufacture certain aircraft engines or aircraft engine parts 108 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) (m) (m) (m) 4.03440 Sales of tangible personal property to or used in or for the construction of a new alternative fuel facility primarily dedicated to the production and processing of ethanol, biodiesel, butanol or their by-products (expired 6/30/2012) State Statute 48-8-3(34.4) Year Enacted 2007 Year Effective 2007 Data Source Fiscal Note for LC 14 9734S/2007 Estimate Reliability Class B Data Reliability Class B Note Description: Sales of tangible personal property to or used in or for the construction of a new alternative fuel facility primarily dedicated to the production and processing of ethanol, biodiesel, butanol or their by-products (expired 6/30/2012) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 0 0 Local Tax Expenditure 1 0 0 (m) Denotes a value of less than $1 million 4.03800 Sale of tangible personal property and fees and charges for services by the Rock Eagle 4-H center State Statute 48-8-3(38) Year Enacted 1976 Year Effective 1976 Data Source Georgia 4-H Annual Cloverleaf Report Estimate Reliability Class C Data Reliability Class C Note Description: Sale of tangible personal property and fees and charges for services by the Rock Eagle 4-H center. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.03900 Certain sales by a public or private school of tangible personal property, concessions, and tickets for admission to school functions State Statute 48-8-3(39) Year Enacted 1994 109 | P a g e Year Effective 1994 Data Source Georgia Department of Education, IRS 990 Form Data, and the National High School Athletic Association Estimate Reliability Class C Data Reliability Class C Note Description: Sales by any public or private school containing any combination of grades kindergarten through 12 of tangible property, concessions, or tickets for admission to a school event or function, provided that the net proceeds from such sales are used solely for the benefit of such school or its students State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 Local Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 4.04000 Sale of major components or repair parts installed in military aircraft, vehicles, or missiles State Statute 48-8-3(40) Year Enacted 1965 Year Effective 1965 Data Source USASpending.gov and The U.S. Economic Census Estimate Reliability Class C Data Reliability Class B Note Description: Sale of major components or repair parts installed in military aircraft, vehicles, or missiles State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 44 40 34 Local Tax Expenditure 31 27 23 (m) Denotes a value of less than $1 million 4.04100 Sale of tangible personal property and services to a nonprofit child-caring institute, child-placing agency, or maternity home State Statute 48-8-3(41) Year Enacted 2004 Year Effective 2004 Data Source U.S. Economic Census Estimate Reliability Class B Data Reliability Class B Note Description: Sales of tangible personal property and services to a child-caring institution as defined in paragraph (1) of Code Section 49-5-3; a child- placing agency as defined in paragraph (2) of Code Section 49-5-3, or maternity home as defined in paragraph (14) of Code Section 49-5-3, 110 | P a g e when such institution, agency, or home is engaged primarily in providing child services and is a non-profit, tax-exempt organization under Section 501(c)(3) of the IRS revenue code. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 Local Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 4.04300 Revenues from coin-operated amusement machines for which individual permits are required State Statute 48-8-3(43) Year Enacted 1992 Year Effective 1993 Data Source U.S. Economic Census and DOR Licensing Statistics Estimate Reliability Class C Data Reliability Class B Note Description: Gross Revenue generated from all bona fide coin operated amusement machines which vend or dispense music or are operated for skill, amusement, entertainment, or pleasure. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 Local Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 4.04600 Sales of tangible personal property or taxable services to nonprofit blood banks State Statute 48-8-3(46) Year Enacted 1980 Year Effective 1980 Data Source U.S. Economic Census and IRS 990 Form Data Estimate Reliability Class C Data Reliability Class B Note Description: Sales to certain blood banks having a nonprofit status according to Section 501(c)(3) of the IRS revenue code State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.04700 Sales of drugs dispensed by prescription, prescription glasses, contact lenses, contact lens samples and sales or use of certain controlled substances or dangerous drugs State Statute 48-8-3(47) Year Enacted 1984 111 | P a g e Year Effective 1985 Data Source State Health Expenditures from the Centers for Medicare and Medicaid Services Estimate Reliability Class B Data Reliability Class B Note Estimate combined with 4.05400 and 4.07200 Description: Sales or use of: drugs that are lawfully dispensable only by prescription for the treatment of natural persons; prescription eyeglasses and contact lenses; prescription contact lens samples; drugs dispensable by prescription for the treatment of natural persons without charge to physicians, hospitals, etc. by pharmaceutical manufacturers or distributors; drugs and durable medical equipment dispensed or distributed without charge solely for the purposes of a clinical trial approved by the FDA or an institutional review board State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 388 405 423 Local Tax Expenditure 268 280 292 (m) Denotes a value of less than $1 million 4.04800 Sales of crab bait to licensed commercial fishermen State Statute 48-8-3(48) Year Enacted 1985 Year Effective 1985 Data Source Georgia Department of Natural Resources and the US Economic Census Estimate Reliability Class C Data Reliability Class C Note Description: Sales of crab bait to licensed commercial fisherman State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.04900 Liquefied gases and other fuels used in poultry or pullet houses or structures (expires January 1, 2013) State Statute 48-8-3(49) Year Enacted 2000 Year Effective 2000 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Liquefied gases and other fuels used in poultry or pullet houses or structures (expires January 1, 2013) 112 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 3 2 0 2 1 0 4.05000 Sales of blood measuring devices, monitoring equipment, or insulin delivery systems used exclusively by diabetics; insulin, insulin syringes and blood glucose monitoring strips State Statute 48-8-3(50) Year Enacted 1986 Year Effective 1986 Data Source International Diabetes Foundation and the Kaiser Family Foundation Estimate Reliability Class C Data Reliability Class C Note Description: Sales of blood measuring devices, monitoring equipment, or insulin delivery systems used exclusively by diabetics; insulin, insulin syringes and blood glucose monitoring strips. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 19 20 22 Local Tax Expenditure 13 14 15 (m) Denotes a value of less than $1 million 4.05100 Sales of oxygen when prescribed by a licensed physician State Statute 48-8-3(51) Year Enacted 1986 Year Effective 1986 Data Source U.S. Economic Census Estimate Reliability Class C Data Reliability Class A Note Description: Sales of oxygen when prescribed by a licensed physician State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 5 5 5 Local Tax Expenditure 3 3 4 (m) Denotes a value of less than $1 million 4.05200 Sale or use of hearing aids State Statute 48-8-3(52) Year Enacted 1986 Year Effective 1986 Data Source Fiscal Note for LC 25 4850/2007 and the Kaiser Foundation 113 | P a g e Estimate Reliability Class A Data Reliability Class B Note Description: Exempts the sale of approved hearing aids from sales and use tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 4 4 4 Local Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 4.05300 Transactions where food stamps or WIC coupons are used as the method of payment State Statute 48-8-3(53) Year Enacted 1986 Year Effective 1987 Data Source U.S. Food and Nutrition Service and the U.S. Department of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Sales tax is not applied on items purchased using food stamps or WIC coupons. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 123 117 111 Local Tax Expenditure 92 88 83 (m) Denotes a value of less than $1 million 4.05400 Sale or use of any durable medical equipment or prosthetic device prescribed by a physician State Statute 48-8-3(54) Year Enacted 1992 Year Effective 1993 Data Source U.S. Census of National Health Expenditures Estimate Reliability Class B Data Reliability Class A Note Included in 4.04700 Description: Sale or use of any durable medical equipment or prosthetic device prescribed by a physician State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure Included in 4.04700 Local Tax Expenditure (m) Denotes a value of less than $1 million 4.05500 Sale of Georgia lottery tickets State Statute 48-8-3(55) Year Enacted 1992 114 | P a g e Year Effective 1992 Data Source Georgia Lottery Commission Annual Report Estimate Reliability Class A Data Reliability Class A Note Description: Sale of lottery tickets authorized by Chapter 27 of Title 50 State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 160 165 171 Local Tax Expenditure 110 114 118 (m) Denotes a value of less than $1 million 4.05600 Sales by any qualified nonprofit parent teacher organization State Statute 48-8-3(56) Year Enacted 1995 Year Effective 1995 Data Source Georgia Parent Teacher Association and IRS 990 Form data Estimate Reliability Class C Data Reliability Class B Note Description: Sales by any qualified nonprofit parent teacher organization State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.05700 Food purchased for off premises consumption State Statute 48-8-3(57) Year Enacted 1996 Year Effective 1998 Data Source U.S. Consumer Expenditure Survey Estimate Reliability Class B Data Reliability Class B Note Description: Exemption applies to food items consumed at home, including meat, poultry, bread, milk, candy, canned soft drinks. It does not apply to alcoholic beverages, tobacco, immediate consumption items, vitamins, minerals, and items sold from vending machines. This exemption does not apply to the local option sales tax but does not apply to special purpose and educational option sales taxes levied at the local level. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 432 472 509 Local Tax Expenditure (m) Denotes a value of less than $1 million 115 | P a g e 4.05900 Sales of eligible food and beverages for on or off-premises consumption by any Girl or Boy Scout council State Statute 48-8-3(59) Year Enacted 1996 Year Effective 1996 Data Source The American Community Survey, IRS 990 Form data, and Girl Scouts of America Annual Report Estimate Reliability Class B Data Reliability Class B Note Description: Sales of food or food ingredients to and by member councils of the Girl Scouts or Boy Scouts of America State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 Local Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 4.06200 Sod grass sold in the original state of production by the sod producer, employee of the producer, or family member of the producer State Statute 48-8-3(62) Year Enacted 1998 Year Effective 1998 Data Source U.S. Census of Agriculture and the U.S. Economic Census Estimate Reliability Class B Data Reliability Class A Note Description: Sod grass sold in the original state of production by the sod producer, employee of the producer, or family member of the producer State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 4 4 4 Local Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 4.06300 Funeral merchandise when paid with funds from the Georgia Crime Victims' Emergency fund State Statute 48-8-3(63) Year Enacted 1998 Year Effective 1998 Data Source The Uniform Crime Report and the National Office for Victims of Crime Estimate Reliability Class C Data Reliability Class C Note 116 | P a g e Description: The sale or use of funeral merchandise, outer burial containers, and cemetery markers as defined in Code Section 43-18-1, which are purchased with funds received from the Georgia Crime Victims Emergency Fund under Chapter 15 of Title 17 State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.06400 Sales of electricity or fuels used exclusively for the operation of an irrigation system on a farm for crop irrigation (expires January 1, 2013) State Statute 48-8-3(64) Year Enacted 2000 Year Effective 2000 Data Source U.S. Census of Agriculture Estimate Reliability Class B Data Reliability Class A Note Description: Sales of electricity or fuels used exclusively for the operation of an irrigation system on a farm for crop irrigation (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 20 15 0 Local Tax Expenditure 14 7 0 (m) Denotes a value of less than $1 million 4.06500 Sales of dyed diesel fuel used exclusively for operations of vessels or boats by licensed commercial fishermen State Statute 48-8-3(65) Year Enacted NA Year Effective NA Data Source The Georgia Department of Natural Resources and the U.S. Economic Census Estimate Reliability Class C Data Reliability Class C Note Description: Sales of dyed diesel fuel used exclusively for operations of vessels or boats by licensed commercial fishermen. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 117 | P a g e 4.07000 Sales of natural gas used directly in the manufacture of electricity State Statute 48-8-3(70) Year Enacted 1999 Year Effective 2000 Data Source U.S. Energy Information Administration Estimate Reliability Class B Data Reliability Class A Note Description: Sales of natural gas used directly in the manufacture of electricity which is subsequently sold State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 37 36 36 Local Tax Expenditure 25 25 25 (m) Denotes a value of less than $1 million 4.07100 Sales to or by an organization whose primary purpose is to raise funds for books, materials, and programs for public libraries State Statute 48-8-3(71) Year Enacted 1999 Year Effective 2000 Data Source National Center for Charitable Statistics Estimate Reliability Class B Data Reliability Class B Note Description: Sales to or by an organization whose primary purpose is to raise funds for books, materials, and programs for public libraries State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) Local Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 4.07200 Sales of wheelchairs and attachments for wheelchairs when sold to permanently disabled individuals State Statute 48-8-3(72) Year Enacted 1999 Year Effective 2000 Data Source The Bureau of Labor Statistics Consumer Expenditure Survey Estimate Reliability Class B Data Reliability Class B Note Description: Sales of wheelchairs and attachments for wheelchairs when sold to permanently disabled individuals 118 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 Included in 4.04700 4.07300 Sales of certain production equipment to film producers and film production companies (expires January 1, 2013) State Statute 48-8-3(73) Year Enacted 2001 Year Effective 2002 Data Source DOR Data for 2009 Estimate Reliability Class B Data Reliability Class A Note Description: Sales of certain production equipment to film producers and film production companies (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 10 5 0 Local Tax Expenditure 7 4 0 (m) Denotes a value of less than $1 million 4.07500 Sales tax holiday for back to school items (expires August 10, 2013) State Statute 48-8-3(75) Year Enacted 2012 Year Effective 2013 Data Source Fiscal Note for HB 1053 LC 34 3342 Estimate Reliability Class A Data Reliability NA Note Sales tax holidays for school supplies have been utilized beginning in 2002 Description: Commencing at 12:01 A.M. on August 10, 2012, and concluding at 12:00 Midnight on August 11, 2012; and Commencing at 12:01 A.M. on August 9, 2013, and concluding at 12:00 Midnight on August 10, 2013. The sale of articles of clothing and footwear; the single purchase of certain personal computers including non-recreational software; and purchases of general school supplies to be utilized in the classroom. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 0 39 41 Local Tax Expenditure 0 27 29 (m) Denotes a value of less than $1 million 119 | P a g e 4.07700 Liquefied gases and other fuels used in structures where plants, floral products, seedlings, and nursery stock are grown for sale (expires January 1, 2013) State Statute 48-8-3(77) Year Enacted 2003 Year Effective 2003 Data Source US Census of Agriculture Estimate Reliability Class A Data Reliability Class A Note Description: Liquefied gases and other fuels used in structures where plants, floral products, seedlings, and nursery stock are grown for sale (expires January 1, 2013) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 (m) 0 Local Tax Expenditure (m) (m) 0 (m) Denotes a value of less than $1 million 4.07800 Materials used to construct a new symphony hall costing in excess of $200 million that is owned and operated by a nonprofit organization (expired 9/1/2011) State Statute 48-8-3(78) Year Enacted 2004 Year Effective 2004 Data Source Fiscal Note for HB 395/2009 LC 28 4533 Estimate Reliability Class A Data Reliability Class A Note This project has been put on hold due to recent economic conditions. Description: From May 5, 2004 until September 1, 2011, sales of tangible personal property used in direct connection with the construction of a new symphony hall facility owned or operated by an organization which is exempt from taxation under Section 501 (c)(3) of the Internal Revenue Code State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 0 0 0 Local Tax Expenditure 0 0 0 (m) Denotes a value of less than $1 million 4.08100 The purchase of food and nonalcoholic beverages provided at no charge aboard a qualified airline State Statute 48-8-3(81) Year Enacted 2005 Year Effective 2005 Data Source Bureau of Transportation Statistics and the Air Transport Association Estimate Reliability Class B 120 | P a g e Data Reliability Class B Note Description: The purchase of food and nonalcoholic beverages provided at no charge aboard a qualified airline not including alcohol or tobacco State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 5 4 4 Local Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million 4.08200 Sales tax holiday for water and energy efficient purchases (expires October 6, 2013) State Statute 48-8-3(82) Year Enacted 2012 Year Effective 2013 Data Source Fiscal Note for HB 1053 LC 34 3342 Estimate Reliability Class B Data Reliability Class B Note Sales tax holidays for energy efficient products have been utilized beginning in 2005 Description: Commencing at 12:01 A.M. on October 5, 2012, and concluding at 12:00 Midnight on October 7, 2012; and Commencing at 12:01 A.M. on October 4, 2013, and concluding at 12:00 Midnight on October 6, 2013. Purchase of energy efficient products or water efficient products with a sales price of $1,500.00 or less per product purchased for noncommercial home or personal use. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 0 (m) (m) Local Tax Expenditure 0 (m) (m) (m) Denotes a value of less than $1 million 4.08300 Sale of biomass materials used to produce electricity or steam or used to produce electricity and steam intended for sale State Statute 48-8-3(83) Year Enacted 2006 Year Effective 2006 Data Source Fiscal Note for HB 1018/2009 LC 18 4936 and the U.S. Energy Information Administration Estimate Reliability Class B Data Reliability Class A Note Description: The sale or use of biomass material, including pellets or other fuels derived from compressed, chipped, or shredded biomass material, utilized in the production of energy, including without limitation, the production of electricity and/or steam. 121 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) (m) (m) (m) 4.08600 Sales of engines, parts, equipment and other tangible personal property used in the maintenance or repair of certain aircraft (expires 6/30/2013) State Statute 48-8-3(86) Year Enacted 2009 Year Effective 2009 Data Source Fiscal Note for HB 116/2009 LC 18 7776 Estimate Reliability Class C Data Reliability Class C Note Exemption extended from 2011 to 2013 in 2011 Description: For the period commencing on July 1, 2007 and ending on June 30, 2013, the sale or use of engines, parts, equipment, and other tangible personal property used in the maintenance or repair of aircraft when such engines, parts, equipment, and other tangible personal property are installed on such aircraft that is being repaired or maintained in this state so long as such aircraft is not registered in this state State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 7 0 Local Tax Expenditure 5 5 0 (m) Denotes a value of less than $1 million 4.08800 Sales of tangible personal property used in the construction of a qualified civil rights museum (expires 7/30/2015) State Statute 48-8-3(88) Year Enacted 2009 Year Effective 2009 Data Source Fiscal Note for HB 364/2009 LC 18 7942 Estimate Reliability Class A Data Reliability Class A Description: Sales of tangible personal property used in the construction of a qualified civil rights museum (expires 7/30/2015) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (1) (1) (1) Local Tax Expenditure (1) (1) (1) (m) Denotes a value of less than $1 million 122 | P a g e 4.5 Sales and Use Tax for Services 4.50000 Admissions and Amusements Description: Admission to school and college sports events; rental of films and tapes by theaters; cable tv and direct satellite tv; coin operated video games (includes pinball and other mechanical amusements); membership fees in private clubs; overnight trailer parks. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 102 104 109 Local Tax Expenditure 76 79 82 (m) Denotes a value of less than $1 million 4.50001 Agricultural Services Description: Veterinary services (both large and small animal); landscaping services (including lawn care); pet grooming State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 106 109 114 Local Tax Expenditure 79 82 86 (m) Denotes a value of less than $1 million 4.50002 Automotive Services Description: Automotive road service and towing services; automotive painting and lube; parking lots and garages; automotive washing and waxing; automotive rustproofing and undercoating; labor charges on repairs to motor vehicles State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 83 85 89 Local Tax Expenditure 62 64 67 (m) Denotes a value of less than $1 million 4.50003 Business Services Description: Billboards; test laboratories (excluding medical); interior design and decorating; commercial art and graphic design; advertising agency fees (not ad placement) sign construction and installation; employment agencies; temporary help agencies; check and debt collection; credit information and credit bureaus; exterminating (includes termite services); maintenance and janitorial services; window cleaning; bail bond fees; telephone answering service; telemarketing services on contract; secretarial and court reporting services; security services (includes private investigation (detective) services; armored car services 123 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 493 506 530 369 379 398 4.50004 Computer and Online Services Description: Online data processing services; downloaded software, books, music, movies and video content, other electronic goods; internet service providers dial-up; internet service providers DSL or other broadband; mainframe computer access and processing service; information services; software custom programs and professional services State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 202 207 217 Local Tax Expenditure 152 156 163 (m) Denotes a value of less than $1 million 4.50005 Construction Labor Description: Labor for the construction of buildings; heavy and civil engineering construction labor; labor of specialty trade contractors State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1,542 1,584 1,660 Local Tax Expenditure 1,157 1,188 1,245 (m) Denotes a value of less than $1 million 4.50006 Fabrication, Installation, and Repair Services Description: Labor charges for repairs for other tangible property; labor charges on tv/radio repairs and other electronic equipment; repair charges generally; labor charges on repair of aircraft; labor charges on repairs to interstate vessels; labor charges on repairs to intrastate vessels; labor charges on repairs to railroad rolling stock; labor charges for repairs or remodeling of real property; service contracts sold at the time of sale of tangible personal property; installation charges by persons selling property; installation charges by persons other than the seller of the property State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 167 171 179 Local Tax Expenditure 125 128 134 (m) Denotes a value of less than $1 million 4.50007 Finance, Insurance, and Real Estate Description: Service charges of banking institutions includes loan broker fees; insurance services; property sales agents (real estate or personal); real estate management fees (rental agents); investment counseling; real estate title abstract services 124 | P a g e State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 355 364 382 266 273 286 4.50008 Industrial and Mining Services Description: Seismograph and geophysical services; metal and nonmetal and coal mining services; typesetting services; platemaking for the print trade State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 7 7 7 Local Tax Expenditure 5 5 6 (m) Denotes a value of less than $1 million 4.50009 Residential Utility Service Description: Interstate telephone (including local, long distance, and cellular service) and telegraph; water; sewer and refuse State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 106 108 113 Local Tax Expenditure 79 81 85 (m) Denotes a value of less than $1 million 4.50010 Personal Services Description: Carpet and upholstery cleaning; swimming pool cleaning and maintenance; water softening and conditioning; shoe repair; garment services (altering and repairing); health clubs, tanning parlors, and reducing salons; laundry and dry cleaning services coin operated; laundry and dry cleaning services not coin operated; massage services (includes dating services); tax return preparation; sports and recreation instruction; barber shops; beauty parlors; travel agent services State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 153 157 165 Local Tax Expenditure 115 118 124 (m) Denotes a value of less than $1 million 4.50011 Professional Services Description: Attorneys; accounting and bookkeeping; physicians; dentists; medical test laboratories; architects; engineers; land surveying; nursing services out of the hospital State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1,218 1,251 1,311 Local Tax Expenditure 914 938 983 (m) Denotes a value of less than $1 million 125 | P a g e 4.50012 Storage Description: Marine towing services (includes tugboats); household goods storage; cold storage (includes fur storage); food storage; mini-storage; marina service (docking, storage, cleaning, repair); packing and crating (include bus services); other warehousing and storage (including automotive storage) State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 46 48 50 Local Tax Expenditure 35 36 37 (m) Denotes a value of less than $1 million 4.50013 Transportation Services Description: Intrastate courier service State Tax Expenditure Local Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 (m) (m) (m) (m) (m) (m) 126 | P a g e 4.7 Vendor Compensation 4.70000 Compensation of dealers for reporting and paying tax State Statute 48-8-50 Year Enacted 1964 Year Effective 1964 Data Source DOR Statistical Report for 2009 Estimate Reliability Class A Data Reliability Class A Note Description: Georgia allows a vendor collection fee of 3 percent for the first $3,000 and then 0.5 percent for amounts above $3,000 but does not impose a maximum limitation per vendor. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 53 56 58 Local Tax Expenditure (m) Denotes a value of less than $1 million 4.9 Casual Sales 4.90000 Sales tax exemption for casual sales State Statute Department of Revenue administrative rule Year Enacted Not available at this time Year Effective Not available at this time Data Source DOR Data for 2009 Estimate Reliability Class B Data Reliability Class A Note Sales of all motor vehicle will be exempt from state and local sales tax beginning March 1st, 2013.Provision listed as 4.30000 in previous reports. Description: Purchases of motor vehicles, boats, planes and other tangible goods sold by persons not in the business of selling such items are not subject to sales tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 151 125 2 Local Tax Expenditure 105 87 1 (m) Denotes a value of less than $1 million 127 | P a g e Sales and use tax expenditures for which an estimate is not currently available Expenditure Statute Summary 4.00100 4.00200 4.00900 4.01100 4.01600 4.01800 4.01900 4.02100 4.02400 4.03100 4.03200 4.03300 48-8-3(1) 48-8-3(2) 48-8-3(9) 48-8-3(11) 48-8-3(16) 48-8-3(18) 48-8-3(19) 48-8-3(21) 48-8-3(24) 48-8-3(31) 48-8-3(32) 48-8-3(33) Sales to Federal Government, State of Georgia or a county or municipality in Georgia or any agency of such governments Tangible personal property furnished by the Federal Government or any county or municipality used by a contractor in the installation, repair, or extension of any public water, gas, or sewer system. Sales of tangible personal property and services used exclusively in the educational function of an approved private college or university located in Georgia whose credits are accepted by the University System of Georgia. Sales of tangible personal property or services to, and the purchase of tangible personal property or services by, any educational or cultural institute The sale or use of Holy Bibles; testaments, and similar books commonly recognized as being Holy Scripture regardless of by or to whom sold Charges for transportation of tangible personal property made in connection with interstate or intrastate transportation All tangible personal property purchased outside this state by a nonresident when the property is brought into Georgia upon the nonresident becoming a resident Sales, transfers or exchanges of tangible personal property resulting from business reorganization when the owners, partners, or stockholders maintain the same proportionate interest or share in the newly formed business Rental of videotape or film to persons charging admission to view the tape or film Sale of tangible personal property manufactured or assembled in Georgia for export when delivery is taken outside of Georgia Aircraft, watercraft, motor vehicles, and other transportation equipment manufactured or assembled in this State for exclusive use outside Georgia Common or Common and Contract Carriers 4.03430 4.03500 48-8-3(34.3) 48-8-3(35) The sale or use of repair or replacement parts, machinery clothing, molds, dies, waxes or tooling for machinery (expires January 1, 2013) Certain materials used in industrial packaging (expires January 1, 2013) 4.03600 4.03610 4.03700 4.03910 4.04200 4.04400 4.04500 4.06000 4.06100 48-8-3(36) 48-8-3(36.1) 48-8-3(37) 48-8-3(39.1) 48-8-3(42) 48-8-3(44) 48-8-3(45) 48-8-3(60) 48-8-3(61) Machinery and equipment used in a facility for the primary purpose of reducing or eliminating air and water pollution Machinery and equipment used for water conservation and incorporated into a qualified water conservation facility. Machinery and equipment used in combating air and water pollution and any industrial material used in a burning or recycling process (expiring January 1, 2013) Cargo containers and related chassis used for storage or shipping by persons engaged in international shipment of tangible personal property Use or lease of tangible personal property when the lessor and lessee are under 100 percent common ownership and where the person who furnishes, leases, or rents the property has paid sales or use tax on the property Sales of motor vehicles to nonresident purchasers when vehicles are immediately removed from Georgia and titled in another state. The sale or use of paper stock when used to print catalogs for distribution outside Georgia. Sales of machinery and equipment and material incorporated and used in a clean room of Class 100,000 or less Advertising inserts that are used in newspapers for resale 4.06600 48-8-3(66) Sales of gold, silver, or platinum bullion 128 | P a g e Sales and use tax expenditures for which an estimate is not currently available Expenditure Statute Summary 4.06700 48-8-3(67) Sales of coins or currency 4.06800 4.06900 4.07900 4.09000 4.09100 4.09200 4.09300 4.09400 4.3.20000 4.3.30000 48-8-3(68) 48-8-3(69) 48-8-3(79) 48-8-3(90) 48-8-3(91) 48-8-3(92) 48-8-3(93) 48-8-3(94) 48-8-3.2 48-8-3.3 Sales of certain computer equipment when the total qualifying purchases by a high technology company exceed $15 million Sales of machinery and equipment and material incorporated and used in a clean room of Class 100 or less Ice used to chill poultry or vegetables during processing or shipment (expires January 1, 2013) The sale of electricity to a manufacturer located in this state used directly in the manufacture of a product (expires January 1, 2013) The sale of prewritten software which has been delivered to the purchaser electronically or by means of load and leave. Sales to an organization defined by the Internal Revenue Service as an instrumentality of the states relating to the holding of an annual meeting in this state for the period commencing July 1, 2012, and ending on December 31, 2013. Sales of tangible personal property used for and in the construction of a competitive project of regional significance, for the period commencing January 1, 2012, until June 30, 2014. The sale, use, consumption, or storage of materials, containers, labels, sacks, or bags used for packaging tangible personal property for shipment or sale. Exemptions for energy, machinery or equipment, industrial material, and consumable supplies used in manufacturing Sales and use by a qualified agriculture producer of agricultural production inputs, energy used in agriculture, and agricultural machinery and equipment 129 | P a g e 5. Insurance Premium Tax The premium tax is levied on premiums of persons, property or risks in Georgia written by insurance companies conducting business in Georgia. The state tax rate is imposed at a rate of 2.25 percent of gross direct premiums. In FY2011, revenues from this tax equaled $361 million. This tax is administered by the state Insurance Commissioner. The proceeds of the tax are deposited into the state general fund. 5.00100 Deduction of retaliatory taxes paid to other states State Statute 33-8-7 Year Enacted 1960 Year Effective Prior to 2000 Data Source Office of Insurance and Safety Fire Commissioner Estimate Reliability Class A Data Reliability Class A Note Description: Property and casualty insurance companies domiciled in Georgia are able to deduct taxes paid to other states on policies written in those states from their Georgia tax liability. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 2 2 2 (m) Denotes a value of less than $1 million 5.00200 Insurance premium tax credits State Statute 33-8-4.1; 33-1-18; 48-7-29.14(b)(1) Year Enacted 1960 Year Effective 2009, 2002, 2008 Data Source Office of Insurance and Safety Fire Commissioner Estimate Reliability Class A Data Reliability Class A Note Description: Insurance companies are allowed a credit against the premium tax. These credits include the Jobs tax credit, the Low-Income Housing credit, and the Clean Energy credit. For a description of these credits, see section 2.6 on corporate income tax credits of this report. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 77 79 81 (m) Denotes a value of less than $1 million 5.00300 Exemption for premiums of high deductible health plans State Statute 33-8-4 Year Enacted 2008 Year Effective 2009 130 | P a g e Data Source Office of Insurance and Safety Fire Commissioner Estimate Reliability Class A Data Reliability Class A Note Description: Insurance companies are allowed to exempt from insurance premium tax any premiums paid by Georgia residents for high deductible health plans as defined by Section 233 of the Internal Revenue Code. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 1 1 1 (m) Denotes a value of less than $1 million 5.00400 Exemption for insurance companies that only insure places of worship State Statute 33-8-13 Year Enacted 1996 Year Effective 1996 Data Source Office of Insurance and Safety Fire Commissioner Estimate Reliability Class A Data Reliability Class A Note Description: Insurance companies that only insure the risks of places of worship are exempt from the state premium tax. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 5.00500 Insurance abatements State Statute 33-8-5 Year Enacted 1996 Year Effective Prior to 2000 Data Source Office of Insurance and Safety Fire Commissioner Estimate Reliability Class A Data Reliability Class A Note Description: Georgia imposes a reduced state rate of 1.25 percent on insurance companies that invest at least 25 percent of their assets in qualified Georgia assets. If the amount invested in qualified Georgia assets was greater than 75 percent, the rate is reduced to 0.50 percent. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 133 137 141 (m) Denotes a value of less than $1 million 131 | P a g e 5.00600 Special deductions for life insurance companies State Statute 33-8-4, 33-8-8, 33-8-8.1 Year Enacted 1981 Year Effective Prior to 2000 Data Source Office of Insurance and Safety Fire Commissioner Estimate Reliability Class A Data Reliability Class A Note Description: Life insurance companies are permitted to deduct contributions to state guarantee funds, license fees paid to local governments, local premium taxes from premium taxes otherwise payable to the state. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 114 118 120 (m) Denotes a value of less than $1 million 132 | P a g e 6. Motor Fuel Tax The tax on motor fuels consists of two taxes. The first tax is levied at a rate of 7 cents per gallon of motor fuel. The second tax is a 3 percent tax on the retail sales price of motor fuel. This tax is commonly referred to as the "second motor fuel tax." Revenues generated by the first and second motor fuel tax are allocated to the Department of Transportation. Revenues from a one percent sales tax on the retail price of motor fuel are deposited into the state general fund. The base of the motor fuel tax is imposed on any source of energy that can be used for propulsion of a motor vehicle on the public highways, including, but not limited to: gasoline, fuel oils, compressed petroleum gas and special fuels. The tax is administered by the Department of Revenue. In FY2011 proceeds from the combined motor fuel tax equaled $933 million. 6.00100 Motor fuel tax refunds for agricultural purposes State Statute 48-9-10 Year Enacted 1978 Year Effective 1978 Data Source DOR Statistical Report for 2010 Estimate Reliability Class A Data Reliability Class A Note Last modification in 2010 Description: Motor Fuel Tax refunds for agricultural purposes. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 20 20 20 (m) Denotes a value of less than $1 million 6.00200 Sales to mass transit vehicles State Statute 48-9-3 Year Enacted 1978 Year Effective Latest modification 2010 Data Source Energy Information Administration and the U.S. Department of Energy Estimate Reliability Class B Data Reliability Class A Note Estimate combined with 6.00300 Description: Fuel sold for use in vehicles operated by a public campus transportation system or fuel sold for use in public mass transit vehicles is exempt from tax. This provision expires 6/30/2015 133 | P a g e State Tax Expenditure (m) Denotes a value of less than $1 million State Fiscal Years ($ in Millions) 2012 2013 2014 3 3 3 6.00300 Sales to campus transportation vehicles State Statute 48-9-3 Year Enacted 2010 Year Effective 2010 Data Source Estimate included in 6.00200 Estimate Reliability Class B Data Reliability Class A Note Description: Sales to campus transportation vehicles State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure Included in 6.00200 (m) Denotes a value of less than $1 million 6.00400 Motor fuel tax exemption for aviation fuel State Statute 48-9-3 Year Enacted 1978 Year Effective 1978 Data Source DOR Statistical Report for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: Exemption for aviation fuel State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 6.00500 Motor fuel tax vendor compensation State Statute 48-9-3,14 Year Enacted 1992 Year Effective 1992 Data Source DOR Statistical Report for 2010 Estimate Reliability Class A Data Reliability Class A Note Description: Motor fuel dealers are allowed to retain 3% of total amounts collected as reimbursement for the cost of collection. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 5 5 5 (m) Denotes a value of less than $1 million 134 | P a g e 7. Alcoholic Beverage Tax This tax is imposed on alcoholic beverages including malt beverages, wine, and distilled spirits. Malt beverages are taxed at a rate of $10 per container up to 31 gallons with a proportionate tax on fractional parts of 31 gallons for draft malt beverages. The tax rate is 4 cents per 12 ounces for bottles and cans with proportionate rates on fractional parts of other sizes. Wine is taxed at a rate of 11 cents per liter and an import tax of 29 cents per liter is imposed on table wines with proportional rates for fractional parts of a liter. An excise tax of 27 cents per liter with an import tax of 40 cents per liter is imposed on dessert wines with proportional rates for fractional parts of a liter. An excise tax of 50 cents per liter and an import tax of 70 cents per liter are levied on distilled spirits. The tax is administered by the Department of Revenue. All taxes on alcoholic beverages totaled $162 million in FY2011. The proceeds of the tax are deposited into the state general fund. 7.00300 Up to 200 gallons annually of home-brew per household State Statute 3-5-61, 3-6-70 Year Enacted 1977 Year Effective 1977 Data Source American Association of Homebrewers and Brew Your Own Magazine Estimate Reliability Class B Data Reliability Class C Note Description: Up to 200 gallons annually of home-brew per household State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 7.00400 Sales to and use by religious organizations for sacramental purposes State Statute 3-5-61, 3-6-70 Year Enacted 1977 Year Effective 1977 Data Source National Center for Charitable Statistics and Catholic.org Estimate Reliability Class B Data Reliability Class C Note Description: Sales to and use by religious organizations for sacramental purposes State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 135 | P a g e 7.00500 Exemption for ethyl alcohol used for certain purposes State Statute 3-5-61, 3-6-70 Year Enacted 1980 Year Effective 1980 Data Source U.S. Economic Census Estimate Reliability Class B Data Reliability Class A Note Description: This chapter shall not apply to ethyl alcohol intended for use or used for the following purposes: scientific, chemical, mechanical, industrial, medicinal, and culinary. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million 7.00600 Malt beverages containing less than one-half of 1 percent alcohol by volume State Statute 3-5-90 Year Enacted 1987 Year Effective 1987 Data Source U.S. Economic Census and Averagebeerprices.com Estimate Reliability Class B Data Reliability Class B Note Description: Malt beverages which contain less than one-half of 1 percent alcohol by volume shall not be subject to any tax levied under this title or any tax levied pursuant to authority granted by this title. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million Alcoholic beverages tax expenditures for which an estimate is not currently available Expenditure Statute Summary 7.00100 3-5-61 Sales to persons outside the state for resale or consumption outside the state 7.00200 3-5-61, 3-6-70 Sales to stores or canteens on U.S. military reservations 136 | P a g e 8. Cigar and Cigarette Excise Tax The tax is levied upon the sale, receipt, purchase, possession, consumption, handling, distribution, or use of cigars and cigarettes in Georgia. The tax is imposed at a rate of 37 cents per pack of 20 cigarettes and pro rata for other sized packages. Little cigars, weighing not more than 3 pounds per thousand are taxed at a rate of two and one-half mills each ($2.50 per 1000). All other cigars are taxed at 23 percent of the wholesale cost price, exclusive of any trade, cash, of other discounts or any promotion, advertising, display or other similar allowances. Loose or smokeless tobacco is taxed at a rate of 10 percent of the wholesale cost price. The tax is administered by the Department of Revenue. In FY2011 the tax totaled $229 million. The proceeds of the tax are deposited into the state general fund. 8.00100 Exemption for purchases for use exclusively by patients at the Georgia War Veterans Home and the Georgia War Veterans Nursing Home State Statute 48-11-2 Year Enacted 1955 Year Effective Latest Modification 2003 Data Source Georgia Department of Veteran Services Estimate Reliability Class B Data Reliability Class C Note Description: Exemption for purchases for use exclusively by patients at the Georgia War Veterans Home and the Georgia War Veterans Nursing Home State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure (m) (m) (m) (m) Denotes a value of less than $1 million Cigar and cigarette excise tax expenditures for which an estimate is not Expenditure Statute currently available Summary 8.00200 48-11-3 Di minimus amount brought into the state by one person 8.00300 48-11-3 Cigars and cigarettes stored in a public warehouse 8.00400 48-11-3 Certain cigars and cigarettes held by licensed dealers 137 | P a g e 9. Financial Institutions Special State Occupation Tax This is a special state occupation tax imposed on the adjusted gross receipts of each depository financial institution that does business or owns property in the state. The state tax rate is levied at a rate of 0.25 percent. In addition to the state tax, counties and municipalities may levy a rate not to exceed 0.25 percent of gross receipts. Any amount paid under the special state occupation tax by a financial institution reduces the institution's state income tax liability by an equal amount. The tax is administered by the Department of Revenue. The revenues from this tax in FY2011 equaled $27 million. The proceeds of the tax are deposited into the state general fund. 9.00100 Deduction for interest paid State Statute 48-6-95 Year Enacted 1975 Year Effective 1975 Data Source FDIC Statistics on Depository Institutions Estimate Reliability Class B Data Reliability Class A Note Description: Financial institutions are allowed to deduct from gross receipts interest paid on all liabilities State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 3 3 3 (m) Denotes a value of less than $1 million Financial institutions tax expenditures for which an estimate is not currently available Expenditure Statute Summary Deductions for income from authorized activities of a domestic international banking 9.00200 48-6-95 facility 9.00300 48-6-95 Deduction for income from banking business with persons or entities outside the U.S. 138 | P a g e 10. Special Assessment of Forest Land Conservation Use Property 10.00000 Special assessment of forest land conservation use property State Statute 48-5A-2 Year Enacted 2008 Year Effective 2008 Data Source Office of Planning and Budget Estimate Reliability Class A Data Reliability Class A Note Description Grants made available by the Georgia General Assembly through annual appropriations and awarded to counties, municipalities and county or independent school districts for purposes of the Special Assessment of Forest Land Conservation Use Property program. State Fiscal Years ($ in Millions) 2012 2013 2014 State Tax Expenditure 14 17 21 (m) Denotes a value of less than $1 million 139 | P a g e 11. Title Fee for Motor Vehicles Beginning on March 1, 2013 motor vehicles titled in Georgia will be subject to a title fee. This legislation was passed in the 2012 session of the General Assembly. As part of this legislation, sales tax on the sale of motor vehicles will be eliminated for purchases occurring on or after March 1, 2013. The title fee rate in CY2013 will be 6.5% and will increase to 6.75% in CY2014 and to 7% in CY2015. It is estimated that this fee will generate $264 million to the state general fund in FY2013. Title fee tax expenditures for which an estimate is not currently available Expenditure 11.001 11.002 Statute 48-5C-1(d)(1)(A) 48-5C-1(3)(7)(A) Summary Exemption for a vehicle when transferred between immediate family members as a result of the death of an immediate family member Exemption for the sale of a vehicle to a service-connected disabled veteran when the veteran received a grant from the United States Department of Veterans Affairs to purchase and specially adapt the vehicle to his or her disability 140 | P a g e Appendix of Tables Expenditure 2.6.013 2.6.031 4.00705 4.00730 4.02500 4.02600 4.02700 4.02800 4.02900 4.02910 4.03400 4.03430 4.03440 4.03500 4.03700 4.04900 4.04910 4.05710 4.05720 4.05730 4.05800 Table 1: Summary of expired and expiring tax expenditures Summary Tax Teleworking Credit Cigarette export tax credit Sales of tangible personal property to a nonprofit health center established and receiving funds pursuant to the U.S. Public Health Service Act. Sales of tangible property and services to a nonprofit volunteer health clinic primarily treating patients with incomes below 200% of the poverty level Sale of seed, fertilizer, fungicide, and certain other agricultural chemicals to farmers, and feed for livestock, fish, or poultry purchased by persons engaged in animal husbandry Sale of machinery used exclusively for irrigation of crops to persons primarily engaged in producing farm crops for sale Sales of sugar for use as food to honey bee producers Sale of cattle, hogs, sheep, horses, poultry, or bees when sold for breeding purposes Sale of certain types of agricultural machinery Off-road equipment and related attachments used exclusively in site preparation, planting, cultivating, or harvesting of timber by persons primarily engaged in growing or harvesting timber Certain machinery used in the manufacturing of tangible personal property The sale or use of repair or replacement parts, machinery clothing, molds, dies, waxes or tooling for machinery Sales of tangible personal property to or used in or for the construction of a new alternative fuel facility primarily dedicated to the production and processing of ethanol, biodiesel, butanol or their by-products Certain materials used in industrial packaging Machinery and equipment used in combating air and water pollution and any industrial material used in a burning or recycling process Liquefied gases and other fuels used in poultry or pullet houses or structures Liquefied petroleum gas or other fuel used in a structure where swine are raised Sales of food and beverages to a qualified food bank Exemption for persons donating prepared food and beverages to a qualified nonprofit agency to be used for hunger relief Exemption for prepared food and beverages that are donated following a natural disaster and used for disaster relief Graduated exemption for the sale of overhead materials used in government contracts Corporate Income Tax Corporate Income Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Expiration Date 12/31/2011 6/30/2010 6/30/2010 6/30/2010 1/1/2013 1/1/2013 1/1/2013 1/1/2013 1/1/2013 1/1/2013 1/1/2013 1/1/2013 6/30/2012 1/1/2013 1/1/2013 1/1/2013 6/30/2010 6/30/2010 6/30/2011 6/30/2011 1/1/2011 141 | P a g e Expenditure 4.06400 4.07010 4.07300 4.07400 4.07500 4.07700 4.07800 4.07900 4.08200 4.08600 4.08700 4.08800 4.08900 4.09000 4.09200 4.09300 6.00200 Table 1: Summary of expired and expiring tax expenditures Summary Tax Sales of electricity or fuels used exclusively for the operation of an irrigation system on a farm for crop irrigation Partial exemption for certain sales of natural or artificial gas, fuel oil, propane, petroleum coke and coal used directly or indirectly in the manufacture or processing of tangible personal property primarily for resale Sales of certain production equipment to film producers and film production companies Sale or use of digital broadcast equipment sold to, leased to, or used by a federally licensed commercial or public radio or television broadcast station, a cable network, or a cable distributor Sales tax holiday for back to school items Liquefied gases and other fuels used in structures where plants, floral products, seedlings, and nursery stock are grown for sale Materials used to construct a new symphony hall costing in excess of $200 million that is owned and operated by a nonprofit organization Ice used to chill poultry or vegetables during processing or shipment Sales tax holiday for water and energy efficient purchases Sales of engines, parts, equipment and other tangible personal property used in the maintenance or repair of certain aircraft Sales of tangible personal property used to renovate or expand a zoological institution Sales of tangible personal property used in the construction of a qualified civil rights museum The sale of an airplane flight simulation training device The sale of electricity to a manufacturer located in this state used directly in the manufacture of a product Sales to an organization defined by the Internal Revenue Service as an instrumentality of the states relating to the holding of an annual meeting in this state Sales of tangible personal property used for and in the construction of a competitive project of regional significance Sales to mass transit vehicles Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Sales and Use Tax Motor Fuel Tax Expiration Date 1/1/2013 12/31/2010 1/1/2013 11/1/2008 8/10/2013 1/1/2013 9/1/2011 1/1/2013 10/6/2013 6/30/2013 6/30/2011 7/30/2015 6/30/2011 1/1/2013 12/31/2013 6/30/2014 6/30/2015 142 | P a g e Table 2: Sales and use tax expenditures by type $ in Millions Expenditure Summary Sales Tax Exemption for a Specific Item6 State State State FY2012 FY2013 FY2014 4.00300 4.00400 4.00500 4.01200 4.01300 4.01510 4.01600 4.01800 4.02000 4.02200 4.02300 4.02400 4.03300 4.03700 4.04200 4.04300 4.04700 4.05000 4.05100 Federal retailer's excise tax if separately itemized to the consumer and Georgia motor fuel tax imposed on the sale of motor fuel Sales of transportation furnished by a county or municipal public transit system or public transit authorities Sales of transportation furnished by an approved and authorized urban transit system School lunches sold and served to pupils and employees of public schools School lunches sold and served to pupils and employees of approved private schools Sales of pipe organs or steeple bells to any church qualifying as a nonprofit The sale or use of Holy Bibles; testaments, and similar books commonly recognized as being Holy Scripture regardless of by or to whom sold Charges for transportation of tangible personal property made in connection with interstate or intrastate transportation Water delivered through water mains, lines, or pipes. Professional, insurance or personal service transactions which involve sales as inconsequential elements for which no separate charge is made Repair services when a separate charge is made to the customer Rental of videotape or film to persons charging admission to view the tape or film Common or Common and Contract Carriers Machinery and equipment used in combating air and water pollution and any industrial material used in a burning or recycling process (expiring January 1, 2013) Use or lease of tangible personal property when the lessor and lessee are under 100 percent common ownership and where the person who furnishes, leases, or rents the property has paid sales or use tax on the property Revenues from coin-operated amusement machines for which individual permits are required Sales of drugs dispensed by prescription, prescription glasses, contact lenses, contact lens samples and sales or use of certain controlled substances or dangerous drugs Sales of blood measuring devices, monitoring equipment, or insulin delivery systems used exclusively by diabetics; insulin, insulin syringes and blood glucose monitoring strips Sales of oxygen when prescribed by a licensed physician 4 4 4 6 6 6 Included in 4.00400 8 8 8 (m) (m) (m) (m) (m) (m) Estimate not available at this time Estimate not available at this time See expenditure estimate for Residential Utilities (4.5009) See expenditure estimates for services (4.50003, 4.50010, 4.50011) See expenditure estimates for Services (4.50003, 4.50010, 4.50011) Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time 2 2 2 388 405 423 19 20 22 5 5 5 6 Sales tax exemptions which are defined primarily by the item being purchased and not defined, or only generally defined, by the seller or purchaser. 143 | P a g e Table 2: Sales and use tax expenditures by type $ in Millions Expenditure Summary 4.05200 Sale or use of hearing aids State State State FY2012 FY2013 FY2014 4 4 4 4.05400 4.05500 Sale or use of any durable medical equipment or prosthetic device prescribed by a physician Sale of Georgia lottery tickets Included in 4.04700 160 165 171 4.05700 Food purchased for off premises consumption 432 472 509 4.06200 4.06600 Sod grass sold in the original state of production by the sod producer, employee of the producer, or family member of the producer Sales of gold, silver, or platinum bullion 4.06700 Sales of coins or currency 4.07500 Sales tax holiday for back to school items (expires August 10, 2013) 4.08200 Sales tax holiday for water and energy efficient purchases (expires October 6, 2013) 4.09100 The sale of prewritten software which has been delivered to the purchaser electronically or by means of load and leave. Sales Tax Exemption for a Specific Purchaser7 4 4 4 Estimate not available at this time Estimate not available at this time 0 39 41 0 (m) (m) Estimate not available at this time 4.00100 4.00600 Sales to Federal Government, State of Georgia or a county or municipality in Georgia or any agency of such governments Sales to any Hospital Authority created by Georgia law Estimate not available at this time Included in 4.00700 4.00610 Sales to any Housing Authority created by Georgia law 2 2 2 4.00620 4.00630 4.00700 4.00710 4.00720 4.00800 4.00900 Sales to local government authorities created on or after January 1, 1980 for the principal purpose of constructing, owning, or operating a coliseum and related facilities Sales to any agricultural commission created by the Department of Agriculture Sales of tangible personal property and services to an approved nursing home, inpatient hospice, general hospital or mental hospital when used specifically in the treatment function. Sales of tangible personal property and services to a nonprofit organization whose primary function is to provide services to persons with intellectual disabilities. Sales to Georgia Society of the Daughters of the American Revolution Sales of tangible personal property and services to the University System of Georgia and its educational units. Sales of tangible personal property and services used exclusively in the educational function of an approved private college or university located in Georgia whose credits are accepted by the University System of Georgia. (m) (m) (m) (m) (m) (m) 82 85 87 2 2 2 (m) (m) (m) 29 30 31 Estimate not available at this time 7 Sales tax exemptions which are defined primarily by the purchaser and not defined, or only generally defined, by the seller or the item being purchased. 144 | P a g e Table 2: Sales and use tax expenditures by type $ in Millions Expenditure Summary 4.01000 Sales of tangible personal property and services used exclusively in the educational function of an approved private elementary or secondary school 4.01100 Sales of tangible personal property or services to, and the purchase of tangible personal property or services by, any educational or cultural institute 4.01700 Sales of fuel or consumable supplies used by ships engaged in inter-coastal or foreign commerce 4.01900 All tangible personal property purchased outside this state by a nonresident when the property is brought into Georgia upon the nonresident becoming a resident 4.02100 Sales, transfers or exchanges of tangible personal property resulting from business reorganization when the owners, partners, or stockholders maintain the same proportionate interest or share in the newly formed business 4.04100 Sale of tangible personal property and services to a nonprofit child-caring institute, child-placing agency, or maternity home 4.04600 Sales of tangible personal property or taxable services to nonprofit blood banks 4.07100 Sales to or by an organization whose primary purpose is to raise funds for books, materials, and programs for public libraries 4.08800 Sales of tangible personal property used in the construction of a qualified civil rights museum (expires 7/30/2015) 4.09200 Sales to an organization defined by the Internal Revenue Service as an instrumentality of the states relating to the holding of an annual meeting in this state for the period commencing July 1, 2012, and ending on December 31, 2013. 4.09300 Sales of tangible personal property used for and in the construction of a competitive project of regional significance, for the period commencing January 1, 2012, until June 30, 2014. 4.3.20000 Exemptions for energy, machinery or equipment, industrial material, and consumable supplies used in manufacturing 4.3.30000 Sales and use by a qualified agriculture producer of agricultural production inputs, energy used in agriculture, and agricultural machinery and equipment Sales Tax Exemption for a Specific Seller8 State State State FY2012 FY2013 FY2014 2 2 2 Estimate not available at this time 23 23 23 Estimate not available at this time Estimate not available at this time 1 1 1 (m) (m) (m) (m) (m) (m) (m) (m) (m) Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time 4.00200 4.01500 4.03800 Tangible personal property furnished by the Federal Government or any county or municipality used by a contractor in the installation, repair, or extension of any public water, gas, or sewer system. Specific fundraising sales by any religious institution lasting no more than 30 days in a calendar year. Sale of tangible personal property and fees and charges for services by the Rock Eagle 4-H center Estimate not available at this time (m) (m) (m) (m) (m) (m) 8 Sales tax exemptions which are defined primarily by the seller and not defined, or only generally defined, by the purchaser or the item being purchased. 145 | P a g e Table 2: Sales and use tax expenditures by type $ in Millions Expenditure 4.03900 4.05600 Summary Certain sales by a public or private school of tangible personal property, concessions, and tickets for admission to school functions Sales by any qualified nonprofit parent teacher organization State State State FY2012 FY2013 FY2014 3 3 3 (m) (m) (m) 4.05900 4.90000 Sales of eligible food and beverages for on or off-premises consumption by any Girl or Boy Scout council Sales tax exemption for casual sales 1 1 1 151 125 2 Sales Tax Exemption for a Specific Purchaser of a Specific Item9 4.01400 4.02500 4.02600 4.02700 4.02800 4.02900 4.02910 4.03000 4.03100 4.03200 4.03310 4.03400 4.03410 4.03420 4.03430 Sales of art and other artifacts for display or exhibition to museums Sale of seed, fertilizer, fungicide, and certain other agricultural chemicals to farmers, and feed for livestock, fish, or poultry purchased by persons engaged in animal husbandry (expires January 1, 2013) Sale of machinery used exclusively for irrigation of crops to persons primarily engaged in producing farm crops for sale (expires January 1, 2013) Sales of sugar for use as food to honey bee producers (expires January 1, 2013) Sale of cattle, hogs, sheep, horses, poultry, or bees when sold for breeding purposes (expires January 1, 2013) Sale of certain types of agricultural machinery (expires January 1, 2013) Off-road equipment and related attachments used exclusively in site preparation, planting, cultivating, or harvesting of timber by persons primarily engaged in growing or harvesting timber (expires January 1, 2013) Vehicles purchased by service-connected disabled veterans when the U.S. Dept. of Veterans Affairs supplies a grant to purchase the specially adapted vehicle Sale of tangible personal property manufactured or assembled in Georgia for export when delivery is taken outside of Georgia Aircraft, watercraft, motor vehicles, and other transportation equipment manufactured or assembled in this State for exclusive use outside Georgia Partial sales tax exemption for jet fuel sold to or used by a qualifying airline at a qualifying airport Certain machinery used in the manufacturing of tangible personal property (expires January 1, 2013) Machinery and equipment used to handle, move, or store tangible personal property in certain distribution facilities Machinery and equipment used directly to remanufacture certain aircraft engines or aircraft engine parts The sale or use of repair or replacement parts, machinery clothing, molds, dies, waxes or tooling for machinery (expires January 1, 2013) (m) (m) (m) 150 80 0 1 (m) 0 (m) (m) 0 2 1 0 33 17 0 12 6 0 (m) (m) (m) Estimate not available at this time Estimate not available at this time 20 21 22 175 90 0 3 3 3 (m) (m) (m) Estimate not available at this time 9 Sales tax exemptions which are specifically defined by the purchaser as well as the item being purchased. 146 | P a g e Expenditure 4.03440 4.03500 4.03600 4.03610 4.03700 4.03910 4.04000 4.04400 4.04500 4.04800 4.04900 4.05300 4.06000 4.06100 4.06300 4.06400 4.06500 4.06800 4.06900 4.07000 4.07200 4.07300 Table 2: Sales and use tax expenditures by type $ in Millions Summary Sales of tangible personal property to or used in or for the construction of a new alternative fuel facility primarily dedicated to the production and processing of ethanol, biodiesel, butanol or their by-products (expired 6/30/2012) Certain materials used in industrial packaging (expires January 1, 2013) Machinery and equipment used in a facility for the primary purpose of reducing or eliminating air and water pollution Machinery and equipment used for water conservation and incorporated into a qualified water conservation facility. Machinery and equipment used in combating air and water pollution and any industrial material used in a burning or recycling process (expiring January 1, 2013) Cargo containers and related chassis used for storage or shipping by persons engaged in international shipment of tangible personal property Sale of major components or repair parts installed in military aircraft, vehicles, or missiles Sales of motor vehicles to nonresident purchasers when vehicles are immediately removed from Georgia and titled in another state. The sale or use of paper stock when used to print catalogs for distribution outside Georgia. Sales of crab bait to licensed commercial fishermen State State State FY2012 FY2013 FY2014 2 0 0 Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time Estimate not available at this time 44 40 34 Estimate not available at this time Estimate not available at this time (m) (m) (m) Liquefied gases and other fuels used in poultry or pullet houses or structures (expires January 1, 2013) Transactions where food stamps or WIC coupons are used as the method of payment Sales of certain machinery and equipment used to improve air quality in a clean room of Class 100,000 or less Advertising inserts that are used in newspapers for resale Funeral merchandise when paid with funds from the Georgia Crime Victims' Emergency fund Sales of electricity or fuels used exclusively for the operation of an irrigation system on a farm for crop irrigation (expires January 1, 2013) Sales of dyed diesel fuel used exclusively for operations of vessels or boats by licensed commercial fishermen Sales of certain computer equipment when the total qualifying purchases by a high technology company exceed $15 million Sales of machinery and equipment and material incorporated and used in a clean room of Class 100 or less Sales of natural gas used directly in the manufacture of electricity 3 2 0 123 117 111 Estimate not available at this time Estimate not available at this time (m) (m) (m) 20 15 0 (m) (m) (m) Estimate not available at this time Estimate not available at this time 37 36 36 Sales of wheelchairs and attachments for wheelchairs when sold to permanently disabled individuals Sales of certain production equipment to film producers and film production companies (expires January 1, 2013) Included in 4.04700 10 5 0 147 | P a g e Expenditure 4.07700 4.07800 4.07900 4.08100 4.08300 4.08600 4.09000 4.09400 Table 2: Sales and use tax expenditures by type $ in Millions Summary Liquefied gases and other fuels used in structures where plants, floral products, seedlings, and nursery stock are grown for sale (expires January 1, 2013) Materials used to construct a new symphony hall costing in excess of $200 million that is owned and operated by a nonprofit organization (expired 9/1/2011) Ice used to chill poultry or vegetables during processing or shipment (expires January 1, 2013) The purchase of food and nonalcoholic beverages provided at no charge aboard a qualified airline Sale of biomass materials used to produce electricity or steam or used to produce electricity and steam intended for sale Sales of engines, parts, equipment and other tangible personal property used in the maintenance or repair of certain aircraft (expires 6/30/2013) The sale of electricity to a manufacturer located in this state used directly in the manufacture of a product (expires January 1, 2013) The sale, use, consumption, or storage of materials, containers, labels, sacks, or bags used for packaging tangible personal property for shipment or sale. State State State FY2012 FY2013 FY2014 1 (m) 0 0 0 0 Estimate not available at this time 5 4 4 (m) (m) (m) 7 7 0 Estimate not available at this time Estimate not available at this time 148 | P a g e Tables 3-8: Distributional tables of selected provisions Tables 3 through 8 provide information on the distribution across Georgia AGI for several exemptions and deductions from the state individual income tax. Due to a lack of data and for reasons of confidentiality, these tables cannot be produced for other provisions. The data used to produce the tables is from the state individual income tax files for 2009. It has not been adjusted for inflation to represent 2012 levels nor does it reflect any legislative changes that may have occurred since 2009. Column 1 of each table provides the categories of Georgia AGI. Column 2 provides the number of returns for each AGI category. Column 3 gives the average value of the tax exemption or deduction taken by filers in each AGI category. Column 4 provides the total value of the deduction or exemption associated with each AGI category and column 5 provides the percent of the total value of the deduction or exemption that falls into that AGI category. Georgia AGI 2009- GA AGI0 0$1,000,000 Total Based on full year resident filers only. Table 3: Total Personal Exemptions Number of Average Value Total Returns Percent of Total 295,116 1,542,815 843,332 677,437 378,534 11,357 4,659 3,753,250 $4,126 $1,217,682,300 5% $5,168 $7,973,630,700 35% $6,072 $5,120,517,900 23% $7,127 $4,827,912,300 22% $8,497 $3,216,232,800 14% $9,120 $103,574,700 1% $8,643 $40,266,900 0% $22,499,817,600 Georgia AGI 2009- GA AGI0 0$1,000,000 Total Based on full year resident filers only. Table 4: Retirement Exemption Number of Average Value Total Returns Percent of Total 228,105 185,229 80,362 62,830 35,495 1,828 1,010 594,859 $17,198 $3,922,887,959 32% $21,613 $4,003,372,675 32% $22,257 $1,788,616,068 15% $23,490 $1,475,874,349 12% $28,832 $1,023,374,139 8% $41,618 $76,077,138 1% $47,400 $47,873,855 0% $12,338,076,184 149 | P a g e Georgia AGI 2009- Table 5: Georgia Higher Education Savings Deduction Number of Average Value Total Returns GA AGI0 0$1,000,000 Total Based on full year resident filers only.. 325 1,296 1,795 6,124 12,964 436 114 23,054 $1,763 $1,565 $1,536 $1,619 $2,393 $3,770 $3,748 $572,994 $2,028,719 $2,757,321 $9,915,027 $31,026,993 $1,643,624 $427,227 $48,371,905 Percent of Total 1% 4% 6% 21% 64% 3% 1% Georgia AGI - 2009 Table 6: Interest on U.S. Obligations Number of Average Value Total Returns GA AGI0 0$1,000,000 Total Based on full year resident filers only. 9,618 13,028 8,511 13,059 15,105 1,431 1,004 61,756 $3,431 $1,932 $1,841 $1,493 $1,859 $5,139 $12,795 $32,995,796 $25,167,208 $15,671,382 $19,495,979 $28,074,843 $7,354,111 $12,846,486 $141,605,805 Percent of Total 23% 18% 11% 14% 20% 5% 9% Georgia AGI 2009- Table 7: Blind and Age 65 Deduction Number of Returns Average Value Total GA AGI0 0$1,000,000 Total Based on full year resident filers only. 167,180 99,988 25,453 10,536 1,687 17 8 304869 $1,778 $1,784 $1,763 $1,777 $1,923 $1,835 $2,113 $297,258,700 $178,426,314 $44,862,300 $18,718,400 $3,244,800 $31,200 $16,900 $542,558,614 Percent of Total 55% 33% 8% 3% 1% 0% 0% 150 | P a g e Georgia AGI 2009- GA AGI0 0$1,000,000 Total Based on full year resident filers only. Table 8: Standard Deduction Number of Returns 218,227 1,363,969 500,859 182,849 17,966 62 17 2,283,949 Average Value Total Percent of Total $2,548 $556,112,300 10% $2,386 $3,254,271,100 58% $2,514 $1,259,233,439 22% $2,771 $506,763,225 9% $2,939 $52,803,951 1% $2,732 $169,400 0% $2,441 $41,500 0% $5,629,394,915 151 | P a g e