Georgia legislature approves state income tax cut, raising deductions while dropping some credits

Georgia lawmakers approved a plan to speed up cutting the state’s personal income tax on the final day of the legislative session.

Thursday night, both the House of Representatives and Senate approved House Bill 463, also known as the Georgia Economic Growth and Tax Relief Act of 2026.

At the beginning of the year, Republican leaders in the Senate said they would be backing a proposal to abolish Georgia’s personal income tax by 2032. The approved plan doesn’t go that far, but instead would drop the tax rate by 0.125 percent until it reaches 3.99 percent – a speed up from the planned drop of 0.1 percent currently on the books.

As part of the bill, 2026’s rate would go from 5.19 percent to 4.99 percent.

The bill also would raise the standard deductions from $24,000 to $30,000 for Georgians filing joint returns. That deduction would begin increasing by $750 starting next year until it hits $36,000. Similarly, it would go from $12,000 to $15,000 for single taxpayers, heads of households, or married taxpayers who are filing jointly, with an increase of $375 until reaching $18,000. These deductions would only go into effect if the state’s revenue for the year increases by at least 3 percent, however.

For Georgians with dependents, the bill would increase deductions from $4,000 to $5,000 and then gradually increase until it hits $6,000. From January 2026 to the end of 2028, up to $1,750 of tips and overtime pay would be tax-free as well.

In an effort to offset the costs, the bill repeals multiple tax credits, including those for teleworking expenses, electric and hybrid vehicles, and medical equipment manufacturers.

The state’s Democratic minority opposed the tax changes, saying they would mostly benefit high earners and that the state needs money to provide services.

This year, Georgia’s personal income tax is projected to collect about $16.5 billion, or 44% of the state’s general revenue.