Eliminating the “Marriage Penalty” on Georgia Families

Over the next few weeks, I will discuss the details of HB 386, the “comprehensive” tax reform bill that we passed this year.  While not as comprehensive as I would have liked it to be, it did successfully address many issues in an attempt to make Georgia friendlier to our families and businesses.

The landmark tax reform package passed during the 2012 Legislative Session has been touted as being good for business. Companies seeking to relocate or expand operations in Georgia will now be able to take advantage of several key incentives that reduce the corporate tax burden, promote industry growth and advance opportunity.

This week we will take a look at how HB 386 is also good for Georgia’s families. While the elimination of the vehicle ad valorem, or “birthday tax”, has received quite a bit of attention, there are several other components of the bill that will positively impact families.  I will begin this discussion with something that should benefit most families- the elimination of the “marriage penalty” that has existed in Georgia’s tax code.  Eliminating the “marriage penalty” increases the individual personal exemption for married couples who jointly file from $5,400 to $7,400.  This change effectively removes the in-state “marriage penalty” for Georgians.  If you are married and choose to file separately, there will be no difference in the amount of the exemption because you will be able to exempt $3,700.

Both Governor Deal and the Special Council on Tax Reform and Fairness for Georgians, who suggested many of the recommendations included in HB 386, found the existing “marriage penalty” to be a tax that ignores family values. A long-standing discrepancy in both state and federal tax law punishes couples filing joint returns and claiming a standard deduction while favoring single filers claiming standard deductions based on the exemption amount.

Logically, it would seem that when two singles file together, the standard deduction would simply be doubled. Currently, this is not the case. The soon-to-be extinguished “marriage penalty” only allows for an increase of approximately 75% of the standard deduction. This anomaly causes two individuals who jointly file to only receive a percentage of the standard deduction that the two individuals would receive if they were unmarried, therefore penalizing couples who take marital vows.

HB 386 corrects this large discrepancy in state tax law by increasing the personal exemption to mirror that of two single filers, effectively increasing the personal exemption amount by $2,000 for couples. Although there is a difference in standard deductions and personal exemptions (a standard deduction is the dollar amount that those who choose not to itemize deductions can subtract from their income, while a personal exemption lowers income tax by claiming support for individuals and direct dependents), increasing the exemption amount corrects the problem in a very applicable way.

What does this really mean for you? It means that all of Georgia’s married taxpayers will now be treated the same under our state tax code whether you have mortgages, student loans, give to churches and charities, or take the standard deduction.  Families will see the impact of the increased exemption not just in their yearly tax returns, but also in their bank accounts. This extra money could be saved for a rainy day or used to make purchases that in turn spur our state’s economic growth.  It is the right thing to do for working families, and it is good for Georgia taxpayers to be able to keep more of their hard-earned dollars at home.  Now we just need to encourage Washington, D.C. to take note of what we are doing here and fix the federal marriage penalty.

It is a pleasure and honor to serve you in the State Senate.  Your livelihood and ability to support your family and/or enjoy the benefits of your labor are important to me.  While limited taxation is necessary to fund government, that burden should be as light as possible and applied fairly and equally.  After all, isn’t that part of what is required for you to enjoy those unalienable rights of life, liberty and pursuit of happiness that our founding fathers spoke of?

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  • © 2012 by
    Senator Bill Heath

    301 Coverdell Legislative
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    Atlanta, Georgia 30334
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