Honorable Chuck Martin
Chairman, House Higher Education
417-A State Capitol
Atlanta, GA 30334
SUBJECT: Fiscal Note
Senate Bill 469 (LC 50 0857S)
March 22, 2024
Greg S. Griffin
State Auditor
Dear Chairman Martin:
The bill would increase the maximum per beneficiary contribution to a Georgia Higher Education
Savings Plan (GHESP) that is allowed as an income tax deduction. Specifically, it increases the
maximum per beneficiary contribution to be allowed as a deduction from $4,000 to $5,000 for single
or separate filers and from $8,000 to $10,000 for joint filers. The bill would apply to all taxable years
beginning on or after January 1, 2025.
Impact on State Revenue
Georgia State University’s Fiscal Research Center (FRC) estimated that the bill would decrease state revenue in fiscal years 2023 and 2024 before a revenue increase in FY 2025, the first fiscal year of the
bill’s full effect (Table 1). The appendix provides details of the analysis.
Table 1. Estimated State Revenue Effects of SB 469 LC 50 0857S
($ millions) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Cost at 5.49% $0 ($2.53) ($2.53) ($2.54) ($2.54)
Cost at 5.39% $0 ($2.48) ($2.49) ($2.49) ($2.50)
Impact on State Expenditures
The Department of Revenue would be able to implement the provisions of the bill with existing
resources.
Respectfully,
Greg S. Griffin Richard Dunn, Director
State Auditor Office of Planning and Budget
GSG/RD/mt
270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone 404.656.2180
S. B. 469 (SUB) Fiscal Note for Senate Bill 469 (LC 50 0857S)
Page 2
Analysis by the Fiscal Research Center
Section 2 of LC 50 0857S proposes to replace the fixed cap on a GHESP account balance, above which
further contributions are not allowed, with an amount established by the GHESP board of directors.
This provision would have no impact on Georgia revenues.
Section 3 of the bill would increase the maximum per-beneficiary contribution to be allowed as an
income tax deduction from $4,000 to $5,000 for single or separate filers and from $8,000 to $10,000
for joint filers. The effects of these increases were analyzed using a microsimulation model on the tax
year (TY) 2021 data from DOR. Based on these data, approximately 24% of filers claiming GHESP
deductions were deducting an amount consistent with having reached the maximum, that is a multiple
of $4,000 for single or separate filers or a multiple of $8,000 for joint filers. For these filers, it is
assumed that the amount of actual plan contributions is sufficient for the amount deducted to increase
to the new per-beneficiary caps. For filers deducting amounts below the per-beneficiary caps, no
increase in deduction is assumed because the filer is apparently already deducting the full amount of
their actual plan contributions.
In aggregate, the total amount of additional GHESP deductions allowed would have been $46.0 million
in TY 2021 had the proposed changes been in effect then. The microsimulation model calculated the
difference between current-law (TY 2024) taxable income, accounting for all other deductions allowed
under current law, and taxable income net of the additional GHESP deductions under the proposed law,
resulting in a net reduction in taxable income of approximately $44.9 million.
The net change in taxable income is assumed to grow based on the population of dependent children.
U.S. Census population estimates for children aged 0–19 were used to estimate growth between 2021
and 2022. The Office of Planning and Budget’s population projections (vintage 2023) for the same ages
were used to grow this revenue impact through TY 2029. Based on these data and projections, the
population of dependent children is expected to grow by .43 percent on average from 2021 through
2029, with slower growth in earlier years and increasing expected growth after 2023.
Under current law, the flat tax rate of 5.49 percent is in effect beginning for TY 2024, with scheduled
decreases of 0.1 percent each year if certain look-forward and look-back conditions are met. Given the
uncertainty of the conditions being met for any given year, Table 2 below provides tax year revenue
effects assuming a constant 5.49 percent rate. However, given that budget projections assume
enactment of the proposed 0.1 percent rate reduction effective January 1, 2024, the table also provides
estimates assuming a constant 5.39 percent tax rate. Further rate reductions, if triggered, would further
reduce the revenue cost of the dependent exemption increase from the period such reduction is
effective.
Table 2. Estimated Additional GHESP Deductions for TY 2025– 29
($ millions) TY 2025 TY 2026 TY 2027 TY 2028 TY 2029
GHESP Deductions $46.00 $46.13 $46.20 $46.29 $46.47
PIT Revenues at 5.49% $2.53 $2.53 $2.54 $2.54 $2.55
The tax year estimates in Table 2 are converted to fiscal year revenue impacts for Table 1 under the assumption that the impact on collections would be realized primarily when taxpayers file returns claiming the deduction, each tax year’s impacts thus impacting revenues for the fiscal year beginning
July 1 of the given tax year.
S. B. 469 (SUB)