Georgia Income Tax Cuts and Flat Rates on the Horizon

Georgia House Bill 1437 enacts tax cuts and a flat personal income rate for tax years beginning on or after January 1, 2024. However, the approved tax cuts may face delays if certain conditions (included at the close of this post) are not met.

Georgia Income Tax Rate Reductions

Starting January 1, 2024, Georgia taxpayers will pay a flat personal income rate. The flat personal income tax rates reductions will be:

• 5.49%, for tax years beginning on or after January 1, 2024;
• 5.39%, for tax years beginning on or after January 1, 2025;
• 5.29%, for tax years beginning on or after January 1, 2026;
• 5.19%, for tax years beginning on or after January 1, 2027;
• 5.09%, for tax years beginning on or after January 1, 2028; and
• 4.99%, for tax years beginning on or after January 1, 2029.

Changes to the Personal Exemption Amounts

Georgia taxpayers are eligible for the personal exemption. The exemption amounts vary and are listed below.

For married taxpayers filing jointly:

• $18,500, for tax years beginning on or after January 1, 2024;
• $20,000, for tax years beginning on or after January 1, 2026;
• $22,000, for tax years beginning on or after January 1, 2028; and
• $24,000, for tax years beginning on or after January 1, 2030.

For married taxpayers filing separately, the amount is one half of the amount for married couples filing a joint return:

• $9,250, for tax years beginning on or after January 1, 2024;
• $10,000, for tax years beginning on or after January 1, 2026;
• $11,000, for tax years beginning on or after January 1, 2028; and
• $12,000, for tax years beginning on or after January 1, 2030.

For single taxpayers or head of household, the amount is $12,000 and for each dependent of a taxpayer the amount is equal to $3,000.

Retirement Income

The bill modifies the definition of retirement income to include $5,000 of an individual’s earned income.

Conditions Necessary to Avoid Delays

The conditions for the tax cuts could pose possible delays for each year if the following criteria are not met by December 1 of the prior year:

• The annual revenue estimate for the upcoming fiscal year is not 3% higher than the current fiscal year estimate;
• The prior fiscal year’s net revenue was not higher than the proceeding five fiscal years’ net tax revenue; or
• The Revenue Shortfall Reserve sum doesn’t exceed the amount of the decrease in state revenue projected to occur due to the reduction in tax rates set to take place in the upcoming year.

Contact an Advisor

As mentioned in the opening of this article, certain conditions have to be met for the tax cuts to take effect for each upcoming year. Smith and Howard’s tax team will continue to monitor this bill and will publish any guidance if and when it’s released. If you have any questions about the tax cuts listed above and how these changes may affect your tax strategy, please contact a member of our tax team by selecting the contact an advisor button below.