(The Center Square) — Georgia officials want to “accelerate” the decrease in the state’s individual income tax rate.
During the legislative session that starts in January, state Republicans plan to amend House Bill 1437, a measure passed in 2022 that gradually lowers the state’s income tax rate until it reaches 4.99% for the tax year starting “on or after” Jan. 1, 2029.
With the acceleration, should lawmakers approve the reduction, the rate for the 2024 tax year would be 5.39% rather than 5.49%. State officials said the change would mark a cut of 36 basis points from the 2023 tax year rate of 5.75%, likely totaling hundreds of millions of dollars in reduced income tax payments.
“We believe that it is your money, not the government’s,” Republican Gov. Brian Kemp said during a conference on Monday to announce the initiative. “One of our most solemn responsibilities as leaders of this state is to be good stewards of what the people have entrusted us with.
“We’re keeping government streamlined, and we’re giving taxpayers more of their hard-earned money back,” the governor added, taking aim at federal policies he says are contributing to higher prices and borrowing costs. “And I will remind you, the savings that they’ll see from this tax cut acceleration are on top of the two income tax refunds totaling $2 billion that we’ve already done.”
Additionally, Kemp said suspending the gas tax saved Georgians more than $1.7 billion last year and roughly $500 million over the past three months. The governor also pointed to property tax relief lawmakers enacted during the last session, which puts “surplus money where it can do the most good — in the hands of Georgia families.”
On Monday, Lt. Governor Burt Jones, a Republican, said that while he would like the state to eliminate the income tax, “we need to do it in a fiscal and responsible manner.”
Kyle Wingfield, president and CEO of the Georgia Public Policy Foundation, said the state has a surplus of roughly $11 billion beyond its rainy day fund, which it can use for the lower tax rates. Even with a “mild returning to earth,” the state could take a revenue reduction in stride, particularly considering the state’s history of prudent fiscal management, he said.
“We’re pleased to see that this is the direction the conversation is going,” Wingfield told The Center Square. “We think with the state in unprecedented strong fiscal shape that this is a good time to think about how to make the state stronger and more competitive in the long run.
“Trimming the income tax will help Georgians work, save and invest more and help grow the economy,” Wingfield added. “The current law calls for lowering the rate over time to 4.99%, and given the moves by our neighbors, including North Carolina, to lower their rates, we think it would be wise for the General Assembly to see how quickly and can get to that level and then how much farther it can feasibly go beyond that over time.”
