A group of mostly Republican Georgia state senators are quickly pushing through legislation to reduce the state personal income tax.
This would be the first step in a plan to eventually eliminate the Georgia personal income tax by 2032 — a plan proposed by a special state Senate committee appointed by Republican Lt. Gov. Burt Jones last summer.
The proposal comes as many states, particularly in the South, are moving toward or have already achieved zero personal income tax.
“Georgia would be an anomaly if we don’t move in this direction, quite frankly,” said Republican state Sen. Blake Tillery, who chaired the special committee and authored both bills, during a Senate Committee on Finance hearing on Monday.
The legislation also comes at an important time politically for its proponents. This year, Jones is running for governor, and Tillery is running for lieutenant governor. Both have made eliminating the state income tax a key selling point in their campaigns.
What’s in the proposals to reduce Georgia’s personal income tax?
The Senate Finance Committee passed four related bills on Monday: Senate Bill 477 and Senate Bill 476, which senators introduced last week, as well as substitutes to House Bill 463 and House Bill 134.
Tillery said Monday that SB 476 is the “more aggressive” version of the reduction, adding that he wanted to give the House options to mull over.
SB 476 would allow the first $50,000 for individual filers and the first $100,000 for joint filers to be deducted from their taxable net income, an increase from $12,000 and $24,000, respectively.
To pay for these tax cuts, SB 476 would sunset all income tax credits by 2032.
Notably, the state would not issue any new sales and use tax exemptions for data centers under the bill.
“Why should a family have to pay for sales tax for a laptop when their kid’s going to Kennesaw State, but if they buy $15 million worth of computers because they’re building a data center, they pay no sales tax at all?” Tillery said.
The bill would also repeal tax credits for insurance companies, banks, port traffic increases, electric vehicles and EV chargers, manufacturing cigarettes for exportation, and more. It would also get rid of some COVID-era tax credits, like for teleworking expenses, personal protective equipment manufacturers, medical equipment and medicine manufacturers, and telecommunications facilities in some counties. SB 476 would also repeal the Georgia Agribusiness and Rural Jobs Act.
SB 477 would lower the current 2026 flat individual income tax rate from 5.19% to 4.99%, then to 4.49% for 2027 and 3.99% starting in 2028. These reductions would be delayed if certain revenue conditions aren’t met.
The bill complements Georgia Gov. Brian Kemp’s proposal to accelerate cuts to the individual income tax.
Corporate income tax would also decrease to 4.99% for tax year 2026.
What’s next for personal income tax legislation in Georgia?
The Senate Finance Committee passed a substitute to HB 463 that replaced its original proposal, a statewide homestead exemption for seniors who volunteer with local governments, with the language of SB 477.
It also passed a substitute to HB 134, an expansion of a sales tax exemption for manufactured homes, that replaced the text with the language of SB 476.
This is to circumvent any challenges to the Senate bills due to a rule that budget and revenue bills must originate in the House.
Now, all four bills are available for a full Senate floor vote, after which they would need to go to the House for further approval.
Democrats, including in the special committee that voted to recommend these measures, have pushed back on reductions to income tax, saying they jeopardize funds for public services and mostly benefit wealthier Georgians.
“I think the government can do a better job of creating infrastructure to deliver services that families all across the state need than an individual can with their tax cuts,” Democratic state Sen. Nan Orrock said Monday.
The repeal of special tax credits could also receive pushback from affected business sectors and beneficiaries.
Tillery said that the full elimination of the personal income tax is still in the works, but the Senate needed to introduce incremental changes first.
“You’ve heard everyone across the hall say, ‘Be prudent on these things. Be prudent,’” he said. “Well if you want us to be prudent, we’ll be prudent. But the plan from the Senate is still to be at zero in six years.”
“It would take another bill,” he added.
WABE’s Rahul Bali contributed reporting to this story.
