Georgia Moves Closer to Eliminating Income Tax
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Lawmakers in Georgia have met to discuss the possibility of axing personal income tax.
Supporters say eliminating the state's income tax could attract businesses and residents, continuing recent tax relief efforts. Critics warn it would force service cuts or higher sales taxes, hitting low- and middle-income households hardest.
Why It Matters
Georgia has been amending its personal income tax rates in recent years. Governor Brian Kemp this year signed into law income tax rebates of up to $500 and a rate cut to 5.19 percent starting in January for all income earned in 2025. The measure is part of a broader plan to lower the rate to 4.99 percent. The law also replaced Georgia's system of tax brackets with a flat income tax.
According to the Governor's Office of Planning and Budget, individual income taxes are expected to amount to around 47 percent of Georgia's state revenue for the current budget year, which started on July 1.
Currently, only eight states don't tax individual income, according to the Tax Foundation.
What To Know
The effort to abolish the Peach State's individual income taxes is being led by Lieutenant Governor Burt Jones, a Republican, who argued in a Tuesday meeting that reducing income taxes to zero would help the state stay competitive, particularly among southern states like Florida and Tennessee which have no income tax, and Mississippi and North Carolina, both of which are working toward eliminating personal levies.
Jones said lawmakers have already given back billions of dollars to taxpayers in recent years through tax cuts, rebates and other measures. Some $7.6 billion has been returned to Georgia taxpayers through property tax relief, motor fuel tax relief, and income tax rebates and cuts, according to Kemp.
"But we must go further," Jones told the Senate Special Committee on Eliminating Georgia's Income Tax. "We must seize this opportunity to lead the South, not trail behind it."
The Georgia State Capitol in Atlanta on December 30, 2024.
The Georgia State Capitol in Atlanta on December 30, 2024.
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Danny Kanso, senior fiscal analyst at the Georgia Budget and Policy Institute, said that for most Georgia households, eliminating the income tax would effectively be a "massive" tax increase. To offset the deficit, he said, the state would need to triple the sales tax and apply it to new products, calling that "a very tall order to replace the state's largest source of revenue."
"[It] doesn't really make sense when you hear we're going to lower taxes, eliminate sources of revenue, and somehow we're also going to raise more money," Kanso said. "That's not something we've really seen work in the past."
The committee also heard from Democrats, who warned that eliminating the income tax could force Georgia to either cut services or raise sales taxes, measures they said would hit low- and middle-income residents the hardest.
"The same people who favor lowering taxes want the ambulance to be there in four minutes when their loved one is having a health crisis," said State Senator Nan Orrock. "That requires an investment."
The committee also heard from Grover Norquist, president of the conservative group Americans for Tax Reform. Norquist argued that states like Florida, which has no income tax, continue to generate revenue even after cutting personal levies. He said that when businesses see states moving to eliminate the tax, they begin investing there, and residents follow.
What People Are Saying
Georgia Lieutenant Governor Burt Jones said on Tuesday: "If we want to continue to stay competitive here in the state of Georgia, and continue to be the number one state to do business, we've got to be looking for ways to keep us competitive and make it where we have a competitive advantage over states that we are competing with all the time."
Danny Kanso, senior fiscal analyst at the Georgia Budget and Policy Institute, said in Tuesday's meeting: "The proposal would have to increase taxes on far more Georgians than it would reduce taxes on, and so it's a little bit of a solution in search of a problem that would likely cause ripples all across the state and across the economy as well."
What Happens Next
The committee has set a goal of delivering a workable plan to eliminate income taxes ahead of next year's legislative session, which begins in January 2026.
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