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Georgia lawmakers weigh further decrease to state’s income tax

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(The Center Square) — The Georgia Senate could vote Wednesday on whether to lower the state’s income tax further.

House Bill 1015 would lower the individual income tax rate from 5.49% to 5.39% for the tax years starting Jan. 1, 2024. It would decrease the rate by 0.1% annually starting Jan. 1, 2025, until it reaches 4.99%.

However, the measure does contain some provisions that could delay the decrease, including if the governor’s revenue estimate for the next fiscal year is not at least 3% above the current fiscal year.

Additionally, the decrease could be delayed if the previous fiscal year’s net revenue collection did not surpass the preceding three fiscal years or if the Revenue Shortfall Reserve does not have more than the expected decrease in state revenue stemming from the tax rate reduction.

Under the measure, the Office of Planning and Budget will prepare a report annually by Dec. 1

to determine whether the impending decrease will be delayed.

HB 1437, which Republican Gov. Brian Kemp signed into law in April 2022, set the state’s tax level at a flat 5.49% rate for the tax year beginning Jan. 1, 2024. At the time, Kemp called it “the largest tax cut in Georgia history.”

“Ideally, to help maximize growth, tax codes should be simple and transparent with low rates and broad bases,” the Georgia Public Policy Foundation said in a recent joint report with The Buckeye Institute. “Governor Brian Kemp and the Georgia legislature are right to pursue tax cuts and other reforms that meet those objectives.”

According to an analysis from The Tax Foundation, Georgia’s top marginal tax rate of 5.49% is better than South Carolina’s (6.4) but lags behind North Carolina (4.5%) and Alabama (5%). Florida and Tennessee do not have income taxes.

Lawmakers are also expected to consider HB 1023, which would match the business tax rate to the individual income tax rate.

“And I will say that [I] personally like the lower personal income tax rate better, but the data we’ve all seen shows that lowering the corporate rate gives the most economic activity,” state Sen. Chuck Hufstetler, R-Rome, said during a recent Senate Committee on Finance meeting. “I wish it was the opposite, but that’s just what the data says.”

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