April 20, 2000 -- Because the federal income tax is the biggest and usually the first tax we see listed on our pay stubs, we naturally tend to focus on it.

But state government takes a bite out of our spending money, too. Bankrate will help you stay on top of what your localities are collecting -- income, sales, personal property or investment taxes, or often a combination of all.

Here's a look at some recent tax actions across the nation.

Georgians get new tax breaks
ATLANTA -- As Georgians were getting their federal returns off to the Internal Revenue Service on April 17, they got some homegrown tax relief.

Gov. Roy Barnes signed into law on Monday a bill that increases the state's homestead exemption by $5,000 beginning July 1, 2000.

The new property tax law means $15,000 of a home's value will be tax-free. Georgia homeowners should see an average $90 reduction in their property tax bills, according to the governor's office. Counties will be reimbursed by the state for money they lose because of the property tax cut.

Vehicle owners also will get a tax break next year when the way personal property taxes on autos are calculated is restructured. Currently, autos are taxed based on full market value. Beginning next year, the tax will be based on 75 percent of fair market value and 25 percent of wholesale value. In 2002, the tax will be calculated using the average of wholesale and fair market values.

Other tax bills signed into law would increase the amount of retirement income excluded from tax for people over 62, or who are permanently disabled, from $13,000 to $13,500 a year; authorize a $500 tax cut for disaster victims; and eliminate taxes on electricity sold to operate irrigation equipment for farm crops.

Michigan lawmaker proposes tax credits for slave descendants
LANSING -- A Detroit state representative wants hundreds of thousands of dollars in tax credits to go to Michigan's African-Americans whose ancestors were slaves.

Rep. Derrick Hale has introduced two bills to make the money available to blacks as payment for their forebears' work as slaves. One measure would provide a $16,500 annual tax credit over 20 years for blacks who have lived in Michigan for 10 years. The other would give all black residents an annual $1,000 in tax credits for 20 years.

Hale acknowledges that his bills primarily are starting points to generate state-level conversation about slave reparations. The issue has been debated since 1866, when Congress passed a federal bill requiring that Confederate property be confiscated to provide former slaves with 40 acres and a mule. President Andrew Johnson vetoed it.

"Basically, I am trying to use the legislation as a vehicle to get the dialogue started," Hale said. "The federal government promised former slaves 40 acres and mule. People aren't interested in mules anymore."

The agreement was reached with less than two hours to go before adjournment, with Gov. Parris Glendening brokering the deal behind closed doors. Maryland is one of only 14 states that tax inheritance, and lawmakers wanted change. But the House and Senate could not agree on exactly how to deal with the issue.

The House wanted full repeal for all heirs. The Senate wanted to eliminate the tax only for direct heirs -- spouses, children and grandchildren. Finally, lawmakers agreed to add siblings to the exempt inheritance group.

The tax now ranges from 0.09 percent to 10 percent, depending on the heir's relationship. With repeal of the tax for close relatives, the rate for more distant heirs will drop from 10 percent to 5 percent.

In other tax-related bills, the legislature approved:

• A one-time tax-free week, Aug. 10-16, 2001, for back-to-school shoppers on some clothing and shoes priced under $100, and
• A change in the method of calculating property taxes. Now it will be 100 percent of a property's market value. Previously, property taxes were based on 40 percent of the value. To compensate for the increased market value basis, local tax rates will go down so that tax bills will remain the same.

State Internet tax filing expected to grow
The 42 states that collect income taxes will be getting more taxpayer returns -- and payments -- electronically in the coming years, predict state tax officials.

A recent overview by Stateline shows that 12 states this year allowed residents to file for free through official state Web sites. Though only a handful of state taxpayers took advantage of the option, Verenda Smith of the Federation of Tax Administrators says she expects state e-filing to mirror the continuing success of the federal program within five years.

States have found that processing returns in cyberspace is cheaper than dealing with mountains of postal paperwork. The cost of processing a paper state return is about $3.50 vs. 50 cents for Internet filing.

And, as with federal returns, state forms are more accurate and legible and taxpayers get their refunds more quickly.

States offering free Internet tax filing this year were Missouri, Colorado, Delaware, Illinois, Indiana, Kansas, Massachusetts, New Jersey, New Mexico, Oklahoma, Pennsylvania and South Carolina.