When Georgians went to the polls last month, among the many races on the ballot was a measure crucial to Georgia’s small businesses that will increase Georgia’s personal property tax exemption from $7,500 to $20,000. Georgians overwhelmingly voted yes, with more than 64 percent supporting the measure to relieve some of the burden on small businesses in the state. The measure was referred to the ballot by Georgia’s General Assembly via HB 808, which passed with bipartisan support and was signed by Governor Brian Kemp in May.
Why this tax exemption matters to small businesses
There are hundreds of thousands of small businesses across the state of Georgia. In fact, more than 175 thousand businesses in Georgia have fewer than 20 employees, over 87 percent of Georgia’s total firms. These small firms employ more than 628,000 Georgians and pay out more than $28.6 billion in wages annually. These firms also face numerous other operating costs and taxes, including income taxes, real estate property taxes, and tangible personal property taxes. Most people are familiar with property taxes on real estate, paid by individual homeowners and businesses, and tangible personal property taxes are similar. These are taxes paid based on the value of non-real estate assets owned by the business, including office equipment, machinery, supplies, and furniture.
Unlike real estate property taxes, the government doesn’t value the asset itself and then send a bill, so businesses must go through the costly compliance process of calculating the value of every business asset and then paying the appropriate tax. For many small businesses, particularly those with minimal assets, the costs associated with calculating and paying the taxes may actually be higher than the taxes owed.
About half of the states, including Georgia, exempt all or some portion of tangible personal property from taxes. Georgia’s current exemption is more than 20 years old and dates back to a 2002 ballot referendum that was approved by more than 72 percent of voters. Prior to this year’s change, the state exempted up to $7,500 in assets, which was the second lowest amount of all the state exemptions. By increasing the exemption to $20,000, Georgia will be much closer to what other states exempt.
At a time when small businesses face significant uncertainty and 22 percent of small business owners say inflation is their top concern, this tax change will provide some much-needed relief to small businesses in the state.
Other Ballot Measures
Georgians also voted overwhelmingly for Constitutional Amendment 1, which allows for the implementation of a statewide homestead exemption. This will provide relief from rising property taxes for Georgia homeowners. Constitutional Amendment 2 also narrowly passed and will create a new state court specifically with jurisdiction over tax issues. Both amendments were also referred to ballot by the legislature.and the end of the year, it may be cause for alarm. Construction jobs dropped marginally this month but have largely rebounded after a series of poor monthly reports in the spring, and the industry is now slightly up in 2024.