GOAL Tax Credit Opportunity for Pass-Through Businesses in Georgia

Georgia House Bill 149 (“H.B. 149”) provides pass-through businesses with a state and local tax (SALT) cap workaround and the option to contribute up to 75% of their annual Georgia income tax liability to the GOAL Scholarship Program. Businesses will receive a federal tax deduction for their contribution to GOAL, in addition to a Georgia tax credit.

We have provided details below regarding the SALT workaround and the Georgia GOAL credit; however, it is important to consult with your tax advisor prior to making any tax elections.

SALT Cap Workaround

Under H.B. 149, pass-through businesses can avoid the $10,000 federal deduction limit for state and local taxes put in place by the Tax Cuts and Jobs Acts by allowing businesses to make an irrevocable election each year to pay Georgia income tax at the entity level for that taxable period. The SALT cap workaround went into effect for tax years beginning on or after January 1, 2022. More details on the SALT cap workaround can be found here.

Georgia GOAL Credit

Pass-through businesses that elect to pay Georgia income tax at the entity level and contribute to the Georgia GOAL Scholarship Program are eligible for the credit in an amount up to 75% of their Georgia income tax liability; however, there is a cap of $100 million in credits available for 2022. All taxpayers must be pre-approved in order to claim the credit and must make the contribution within 60 days after receiving the pre-approval.

The maximum credit that can be claimed is 75% of the pass-through entity’s income tax liability, and there is no carryforward opportunity if there was excess credit purchased over that amount.  

Questions?

For questions about the SALT cap workaround and the Georgia GOAL credit, please contact your Smith and Howard advisor below or by calling 404-874-6244.