If the individual provisions of the Tax Cuts and Jobs Act (TCJA) expire at the end of next year, tax filing will get more complicated for millions of Americans.
The TCJA simplified tax filing through two main channels: encouraging taxpayers to take the standard deduction and raising the threshold for the alternative minimum tax. Taxpayers have the choice of taking the standard deduction or using itemized deductions. Itemized deductions allow taxpayers to deduct different specific expenses—most notably mortgage interest, state and local taxes and charitable contributions—to reduce their taxable income. Meanwhile, the standard deduction is a flat deduction available to all taxpayers.
Higher-income taxpayers more often utilize itemized deductions as they tend to (among other things) make higher charitable contributions, pay more in mortgage interest, and pay higher state and local taxes, making itemizing more advantageous than taking the flat standard deduction. However, complying with itemized deductions takes more work.
The TCJA shifted people to the simpler standard deduction thanks to a few major changes.
First, the law nearly doubled the standard deduction and indexed it for inflation each year, while suspending personal exemptions. These changes were also connected to a broader reform of how the tax code treats families, which included an expansion of the child tax credit. The law also limited two major itemized deductions, capping the SALT deduction at $10,000 per taxpayer and reducing the limit on mortgage interest from interest on $1 million of principal to $750,000.
Locally, Georgia was one of many states that incorporated elements of the TCJA into their own state codes. This adds to the potential disruption if the law isn’t extended.
This week’s commentary from Alex Muresianu, Senior Policy Analyst at the Tax Foundation, looks at the Tax Cuts and Jobs Act and how it simplified the tax code. We also have the latest news and analysis from the last week, including:
- Multiple counties will ask voters to approve transportation tax initiatives this fall
- Parents pessimistic about direction of K-12 education nationwide
- Georgia reports increased revenues to start the new fiscal year
- 12 Georgia athletes bring home Olympic medals
Have a great weekend,
– Kyle Wingfield
Friday’s Freshest
We don’t do hard things anymore
Americans, and Georgians in particular, need to get back to building. Building what, you ask? Pretty much everything. For starters, we don’t build nearly as many homes as we used to. The peak in Georgia homebuilding – across all types – came in 2005 with more than 109,000 new housing units. Since the Great Recession, we haven’t come close to that number.
Recession coming? Why the Federal Reserve’s high interest rate policy may backfire
History will not judge the Powell Federal Reserve well should the economy now succumb to a recession. Posterity will not only ask why it allowed the inflation genie out of the bottle by delaying interest rate hikes in 2021 but also why it seemed to learn nothing from that experience and allowed the economy to fall into recession despite hewing to a backward-looking monetary policy.
Previously unknown parts of Georgia’s eminent domain law surprise, displease landowners
Almost 20 years ago, an unpopular U.S. Supreme Court ruling forced property owners throughout Georgia to worry they could lose their property rights to eminent domain until a 2006 law put their minds at ease. But there were a few things in that Georgia law they didn’t know about. Consequently, they may have reason to brood yet again. As it turns out, Georgia law doesn’t shield landowners from eminent domain, at least not to the extent they thought it did.
Back to school looks different these days
Children across Georgia either already have or will soon be returning to school. Recently, however, “back to school” has begun to look a little different for a growing number of students. That is because the delivery of education across the country is evolving to meet changing needs. And Georgia lawmakers have already begun to respond to this change.
Supreme Court returns checks and balances to governing
For four decades, the judiciary has ceded the important power of reviewing executive agencies’ rules and regulations to the agencies themselves. Reasserting the court’s preeminence in interpreting the law is a key step toward more constitutional balance with the executive branch, which is merely meant to carry out laws.
The Latest
Economy
Georgia reports increased revenues to start fiscal 2025
With one month in the books, Georgia’s tax collections seemingly started the year on a positive note after ending last fiscal year with decreased collections. Peach State officials said this week that total General Fund receipts for July, the first month of fiscal 2025, surpassed $2.5 billion. According to state numbers, that is an increase of 2.7%, or $66.3 million, over July 2023 in fiscal 2024, when net tax collections totaled nearly $2.5 billion.
Direct spending on TV, film plummets 37% in Georgia, hurt by strikes
Direct spending in Georgia from TV and film producers tumbled by more than a third in the fiscal year that ended June 30 compared to fiscal 2023 due to the double whammy of two strikes and reduced spending from media companies across the board. The $2.6 billion direct spending figure was down 37%. It was also the lowest spending amount since the pandemic year of 2020, when production literally stopped for months starting in March of 2020.
Georgia House Rural Development Council to meet in Rome
The Georgia House Rural Development Council will kick off a series of meetings around the state with an Aug. 29 session in Rome. The council is tasked with researching and recommending initiatives aimed at boosting the economic resiliency of counties outside metro areas. At the Rome meeting members are scheduled to hear from a wide range of experts on current issues facing rural Georgia.
Officials race to meet Hyundai’s water needs
Local counties have been hustling to make sure EV maker Hyundai gets the water Georgia promised it to produce cars in Coastal Georgia. In two hastily called meetings in late June, Bulloch County agreed to work with neighbor Bryan County to provide water and sewer services and to establish a well mitigation fund program.
Education
EdChoice releases 12th annual Schooling in America survey
The nationally representative survey of the general public and parents of school-age children offers an in-depth look at the opinions and trends shaping K–12 education in America. Nearly two-thirds of parents feel that K–12 education in America is on the wrong track, while parents continue to show strong levels of support towards policies like education savings accounts, school vouchers, charter schools, and tax-credit scholarships.
University System of Georgia reports $21.9B in economic impact
The University System of Georgia produced an economic impact of $21.9 billion during fiscal 2023, a 9% increase over the previous year, according to a study released Wednesday. The system’s institutions also generated 163,332 full- and part-time jobs across the state during that same period, the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business reported.
Families to spend an average of $875 on back-to-school supplies
Consumers have spent billions more on school supplies than they had during the pre-pandemic years as costs rise and the list of required items gets longer, Katherine Cullen, National Retail Federation senior director of industry and consumer insights, told FOX Business. This year, families with children in kindergarten through high school are expected to spend $38 billion, a significant increase from $26 billion in 2019.
UGA students begin fall semester with new campus safety enhancements
Fall classes get underway Wednesday at several Georgia colleges. Returning University of Georgia students might notice some changes around campus when they return to classes on Wednesday. Some of those changes involve campus safety. Some of the safety enhancements went into effect over the summer.
Government accountability
Lawsuit settled against northwest Georgia city over toxin-laden drinking water
Touted as one of the most comprehensive settlements of its kind in the nation, the city of Calhoun has agreed to take steps to protect northwest Georgia’s water supply from years of widespread PFAS pollution. The Coosa River Basin Initiative announced it is resolving a federal lawsuit against the city alleging violations of federal law and allowing PFAS in drinking water.
AI is about to boost power bills—who’ll take heat for that?
The AI-driven, energy-hungry data-center boom was bound to bring up uncomfortable questions: Will it raise energy bills and, if so, who will shoulder the costs? America’s largest wholesale power market is starting to see the results. Rapid data-center build-out is increasing power demand just as a wave of older power-plant retirements is reducing supply.
Transportation
Fall ballots in multiple Georgia counties to include transportation tax
Voters in counties around the state of Georgia will decide on Nov. 5 whether to approve a transportation tax to cover improvements to local infrastructure. A sales tax referendum on ballots in counties that include Cobb, Douglas, Forsyth, Gwinnett, Hall, Henry and Murray each authorize or continue a 1% tax for purposes that include transportation work. The Foundation has previously detailed proposed transportation plans in Gwinnett and Cobb counties.
DOT Board greenlights two major metro-Atlanta projects
The State Transportation Board approved bids for two major projects in metro Atlanta representing almost $6 billion in investment between them. Board members voted unanimously to greenlight the addition of toll lanes along Georgia 400 in Fulton and Forsyth counties and an overhaul of the heavily congested Interstate 285/I-20 West interchange in Cobb and Fulton counties.
Bonus
The Peach Smell of Success: 12 Georgia athletes bring home Olympic medals
The 2024 Summer Olympics held its closing ceremony on Sunday, with Team USA taking home 126 medals — the most of any country competing this year. Out of these long-awaited victories, 15 of the medals were earned by Georgia athletes. The medalists excel in sports ranging from track to basketball to weightlifting.
The Supreme Court vs. the Administrative State
Forty years ago, the Supreme Court ruled that judges should defer to regulators when they offer reasonable interpretations of ambiguously worded laws. As a matter of legal doctrine, the case in question—Chevron v. Natural Resources Defense Council—was important from the start. In the larger scheme of things, it was a fairly mundane subset of a very mundane subject. Then, about a decade ago, everything changed.
Dallas Cowboys are the first sports team to surpass $10 billion in value. What about the Falcons?
The Dallas Cowboys are the first sports team in history to reach $10 billion in value, according to Sportico. Sportico’s annual rankings of all 32 NFL teams came out this week and estimated the Cowboys to be worth $10.32 billion. The Cowboys were estimated to be $2.53 billion more valuable than the second-place team, the Los Angeles Rams, at $7.79 billion. The Atlanta Falcons were ranked No. 13, with a valuation of $5.9 billion.
Quotes of Note
“The less talent they have, the more pride, vanity and arrogance they have. All these fools, however, find other fools who applaud them.” – Erasmus
“The Framers could hardly have envisioned today’s vast and varied federal bureaucracy and the authority administrative agencies now hold over our economic, social, and political activities. … The administrative state with its reams of regulations would leave them rubbing their eyes.” – Chief Justice John Roberts
“Every year we’ve been here, I feel like we’ve had more players capable of going in and play winning football, and every year that [number] goes down. So, we have to keep working to increase that number.” – Kirby Smart