By Chris Clark, President & CEO, Georgia Chamber of Commerce
As the state’s largest business advocacy organization, the Georgia Chamber has worked diligently alongside state leaders and lawmakers to ensure that Georgia’s tax structure and economic policy are some of the most competitive and fiscally responsible in the nation. For over 40 years, companies have flocked to our state because of our pro-job creation philosophy. Having consistent tax and regulatory systems is common sense in a world dominated by economic uncertainty. Now, we need the Federal government to follow suit and mirror the same approach that our state leaders follow.
In 2017, the Tax Cut and Jobs Act brought about the most comprehensive tax overhaul the United States had seen in over three decades. Many of the provisions were beneficial for Georgia businesses. However, our members have identified several areas of the legislation that require immediate and significant fixes to protect small businesses and start-ups here in Georgia.
A provision found in Section 174 pertains to research and development initiatives, and starting this year, will limit how those expenses can be deducted. As companies, especially in their early years of operation, are investing heavily in new products, technologies, and processes, their upfront research and development expenses are substantial. I have heard from hundreds of Chamber members that this change disincentivizes them from engaging in new product development, posing a significant threat to the state’s innovation ecosystem. When these important deductions are stripped from our businesses, it dramatically impacts their ability to invest and hire new employees.
Another change in Section 179 previously allowed companies to invest in necessary capital equipment because Bonus Depreciation was expanded to 100% of its purchasing price. This was a good thing for small and start-up businesses. Now, changes to that practice significantly reduce the ability of companies, especially in Georgia’s robust construction and manufacturing industries, to invest in new equipment and technology. These are areas that grow the tax base of local communities and increase the productivity of businesses, making them a priority to preserve.
A provision found in Section 163(J) made a change that limits the amount of business interest expense based on the amount of interest income. This policy gets complicated, but the bottom line is that this deduction has been an invaluable asset to hometown businesses. As rising interest rates continue to impact Georgia companies and families, action must be taken to shield our business community from unpredictable national economic trends.
Finally, section 199A of the federal tax code was revised to allow many mom-and-pop businesses to deduct up to 20% of their income. At the end of 2026, this provision will no longer apply, leaving small businesses, S Corps, LLCs, and others much worse off than before the 2017 legislation was implemented. Soon, Georgia’s small businesses could be paying more taxes than multinational firms. Over 95% of companies in our state are small businesses and will experience the impacts of this problem.
Congress must stop playing political games and prioritize the well-being of the business community both here in Georgia and throughout the nation. Fair and predictable tax policies are vital for the success of Georgia companies and the continued record-breaking economic development and investment our state has experienced. Reach out to your senator or congressman today and ask them to make these changes before it’s too late!
To learn more about the Georgia Chamber’s efforts to fight business-killing legislation in Washington, visit www.gachamber.com.