Gov. Nathan Deal last week signed tax reform legislation that will wipe out ad valorem taxes on all vehicles sold after March 1, 2013.
The law also reduces the marriage penalty by increasing the state income tax deduction by $2,000 for married couples and also eliminates the sales tax on energy used for manufacturing.
In place of the annual “birthday” auto tag tax, the state will charge a one-time title fee between 6.5 and 7 percent on all auto sales transactions after that date. Because local governments will lose funds with the phase-out of the annual ad valorem tax, the state is guaranteeing to reimburse those agencies the current annual revenue plus an annual 2 percent mark up each year.
The sales tax break on energy used for manufacturing will make Georgia competitive with other nearby states that offer the same incentive, and combined with other changes in the bill Georgia businesses will save $160 million over the next three years.
The legislation also re-instates the sales tax holidays for back to school items in August 2012 and 2013 along with those in October 2012 and 2013 for energy efficient products.
The new law also would cap the retirement income exclusion for filers ages 65 and up at $65,000, cap conservation easement credits at $500,000 and eliminate a sales tax exemption for film production activities. It also would eliminate the current sales tax exemption used in agriculture, except for those used for education purposes.
The legislation also does away with all sales taxes used in manufacturing, mining and newspaper publishing except for any sales taxes used for education purposes.
Other portions of the law will reduce the state’s take on jet fuel, construction materials “used on a project of regional significance,” and require sales taxes on some Internet transactions.
The net effect of all the changes means the state will lose approximately $62.8 million in projected revenue over the next three years, while local governments will lose $199.6 million, according to a report from the state auditor and the legislative Office of Planning and Budget.
