Tax law will end ‘birthday tax’ for autos, help married couples

State Rep. Matt Ramsey (R-Peachtree City).

Starting March 1 of next year, Georgia residents buying an automobile will no longer pay an annual ad valorem tax or the one-time sales tax on the transaction.

Instead, they will pay a one-time 6.5 percent title fee that will increase to 6.75 percent in 2014 and 7 percent in 2015, under legislation approved last week by the Georgia Senate and House of Representatives.

But that won’t change anything for your current vehicle, unless you sell it after next March 1. The annual ad valorem taxes will continue to be charged on all vehicles sold prior to March 1, 2013 unless they are re-sold.

Rep. Matt Ramsey of Peachtree City noted that the title fee will in effect be balanced out by elimination of the sales tax, which ranges from 6 to 8 percent depending on the amount of sales tax charged in the owner’s county of residence.

Because the elimination of the sales tax on automobiles will reduce local government revenues, the legislation has language that guarantees the current revenues to local governments plus a 2 percent markup for each subsequent year as the ad valorem tax on automobiles is phased out.

The new law also has a host of other changes to the Georgia tax code. It grants a $2,000 exemption increase for married couples, or $1,000 each for married persons filing separately, in an effort to close the gap on the “marriage penalty” under state income tax law.

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.

Ramsey said the tax cuts will save Georgia businesses $160 million over the next three years also also save married residents $360 million over the same time frame.

Eliminating the sales tax on energy used in manufacturing will make Georgia competitive with other states that do not charge such a tax, Ramsey said.

“I think it is a good first step,” Ramsey said of the overall bill and the taxes it will reduce. “I think in years ahead we can build on it and seek to do additional tax reform that hopefully makes us the most business-friendly state in the country and continues to reduce the tax burden on Georgia families.”

helpful lawyer
helpful lawyer's picture
Joined: 10/27/2006
Tax reduction -- now you see it, now you don't

Actually, the $65,000 retirement income exclusion for people 65 and older was scheduled to go up to $100,000 in 2013, $150,000 in 2014, $200,000 in 2015 and unlimited after 2016, and the new law caps the retirement income exclusion at $65,000, removing all these scheduled increases in the amount excluded. Thus some older folks may not feel they were done any favors, and the new law may encourage them to move to Florida (which has no state income tax).

See Georgia Code section 48-7-27(a)(5).

SPQR's picture
Joined: 12/15/2007
stand by for ram old folks


Thank you very much for helping to fund this tax break!

What! They didn't tell you?

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