State Income Tax Benefits in Georgia

When you prepare your Georgia state income tax return you start with your federal adjusted gross income and then make certain additions and deductions to arrive at your Georgia taxable income. Some of the deductions and credits in Georgia are similar to the federal tax benefits, but may be calculated differently. There are other Georgia deductions and credits available that are not included on your federal return. You should be aware of these tax benefits and check your Georgia state return before sending it in to be sure you have claimed all the benefits you qualify for.

Retirement income

Social security and railroad retirement benefits are not subject to state income tax in Georgia. If any portion of these benefits was included in your federal income tax return, you can subtract that amount on your Georgia state tax return.

If you are age 62 or older, or you are permanently disabled you can exclude up to $35,000 of retirement income on your Georgia income tax return. If you are married, you and your spouse must qualify separately, but you could potentially exclude up to $70,000. Retirement income for purposes of this exclusion includes interest, dividends, alimony, capital gains, taxable IRA distributions, taxable pensions, income from rental property, and royalties. It also includes up to $4,000 per person in salaries, wages and other earned income.

If you are 65 or older, you can claim an additional $1,300 with your standard deduction on your Georgia tax return.

Military personnel

If you are a member of the National Guard or any reserve unit of the Armed Forces your pay while you are stationed in a combat zone is not subject to Georgia state income tax.

If you are a Georgia resident and a member of the National Guard or Air National Guard and you are on active duty full-time or active duty training in the U.S. Armed Forces for more than 90 consecutive days you can claim a credit for life insurance premiums you pay through the Group Life Insurance Program administered by the U.S. Department of Veterans Affairs. The credit cannot exceed your tax liability, but any unused credit can be carried forward to the following tax year.

Military personnel who are residents of Georgia and are stationed outside the continental U.S. have six months from the date they return to the U.S. to file their Georgia state income tax return, without incurring any interest or penalties.

Deductions and Credits

If you make contributions to the Georgia Higher Education Savings 529 Plan you can claim a deduction for the amount you contribute, up to $2,000 per beneficiary.

Effective January 1, 2008, if you make a contribution to a charitable student scholarship organization you can claim a credit on your Georgia state income tax return. The credit is $1,000 for taxpayers filing as single or head of household, $1,250 for married filing separately and $2,500 for married filing jointly. Before you make the contribution, you have to obtain preapproval by filing Georgia Form IT-QEE-TP1. Once you make the contribution you need to obtain a Form IT-QEE-SS01 from the student scholarship organization. Then you complete Form IT-QEE-TP2 and attach it to your Georgia state income tax return.

If you paid the cost of a private driver training school for a dependent child who successfully completed the course, you can claim a credit for the cost, up to a maximum of $150.

Starting with the tax return you file for 2009, you can claim a deduction for 100% of the premium payments for a high-deductible health plan associated with a health savings account, provided you do not claim the expense as an itemized deduction. Also starting in 2009, if you are an employer with 50 or fewer employees, you can claim a tax credit of $250 per employee for the cost of health insurance you provide for your employees under a high-deductible plan associated with a health savings account.

If you disabled, you can claim a credit of up to $500 if you purchase a new single-family home that includes features adapted to your disability, such as a no-step access entry, wider interior passage doors, reinforcements in bathroom walls to allow the installation of grab bars, and light switches and outlets located in accessible places. If you retrofit your existing home with these features, you can claim a credit of up to $125.

You can claim a child and dependent care expense credit on your Georgia return that is equal to 30% of the credit you claim on your federal return. If you pay for care-giving expenses for a family member, you can claim a credit for 10% of the cost up to a maximum credit of $150. Care-giving services include home health agency services, personal care services, homemaker services, adult day care, and health care equipment and supplies.

Effective January 1, 2008, if you adopt a foster child you can claim a credit of $2,000 per year, starting in the year the adoption is finalized until the year the child reaches age 18.

If your federal adjusted gross income is less than $20,000 and you cannot be claimed as a dependent on another person's federal or Georgia state income tax return, you can claim a low income credit. The amount of the credit ranges from $5 to $26 for each personal exemption you can claim, and depends on your income level.

If you receive disaster assistance from the Georgia Emergency Management Agency or the Federal Emergency Management Agency, you can claim a credit of $500 or the amount of assistance you received, whichever is less.

If you paid taxes to another state for income that is included in your Georgia tax return, you can claim a credit on your Georgia return for the taxes you paid to the other state.

Rural physicians in Georgia qualify for a $5,000 tax credit. They can claim this credit for up to five years. To qualify you must be licensed to practice medicine in Georgia and must live and practice in a rural county.

Sources:
Georgia Individual Income Tax 500 and 500EZ Forms and General Instructions - Georgia Department of Revenue