HB388: HB388 Income tax; exempt income received as personal compensation for active duty service while stationed outside Georgia

Under current Georgia law, income tax is calculated based on rules in O.C.G.A. § 48-7-27, which lists specific types of income that are excluded from a person's taxable net income. This bill adds a new exclusion to that list: personal compensation received for active duty service in the United States armed forces while the service member is stationed outside Georgia. The change means that pay earned during active duty service performed outside the state would not count toward a service member's Georgia taxable income. The bill would take effect on July 1, 2025, but the tax exemption itself would only apply to taxable years beginning on or after January 1, 2026, meaning affected service members would first see the benefit when filing returns for that tax year.

• Adds a new exemption to Georgia's income tax code (O.C.G.A. § 48-7-27) excluding active duty military pay earned while stationed outside Georgia from state taxable income.
• Applies specifically to personal compensation for active duty service in the United States armed forces, not to other forms of income.
• Sets a delayed applicability date so the exemption only applies to taxable years beginning on or after January 1, 2026, even though the law takes effect earlier.
• Repeals any existing state laws that conflict with the new exemption.

Active duty members of the United States armed forces who are Georgia residents or otherwise subject to Georgia income tax but are stationed outside the state. The Georgia Department of Revenue would also be affected since it administers the state income tax computation this bill changes.

Service members stationed outside Georgia would owe less in state income tax, since their active duty pay would no longer count as taxable income starting with the 2026 tax year. This could increase take-home pay for affected military families and slightly reduce state tax collections.

• Section 1 amends subsection (a) of O.C.G.A. § 48-7-27 by adding paragraph (12.6), excluding personal compensation for active duty service outside Georgia from taxable net income.
• Section 2 sets the effective date as July 1, 2025, but limits the exemption's actual applicability to taxable years beginning on or after January 1, 2026.
• Section 3 repeals any conflicting laws, a standard clause clearing away contradictory statutory provisions.

1. 2025-02-13House Second Readers (House)
2. 2025-02-12House First Readers (House)
3. 2025-02-11House Hopper (House)

• David Clark (R, HD-100)Primary sponsor
• Josh Bonner (R, HD-073)
• Bill Hitchens (R, HD-161)
• Reynaldo Martinez (R, HD-111)
• Charles Cannon (R, HD-172)
• Brad Thomas (R, HD-021)

• income tax
• military pay
• veterans and service members
• tax exemptions