SB168: SB168 Individual Tax Rates; reduction of the state income tax over time; revise provisions

Georgia has been gradually lowering its state income tax rate under a law passed in recent years, with small annual cuts of 0.10 percent that could still be delayed if state revenue targets were not met. Senate Bill 168 rewrites that schedule in Code Section 48-7-20 of the Official Code of Georgia (O.C.G.A. § 48-7-20). Instead of shrinking by 0.10 percent per year down to a floor of 4.99 percent, the tax rate would now drop by a full 1 percent each year, continuing until it reaches 0 percent, meaning Georgia would eventually have no state income tax at all. The faster cuts would start January 1, 2026, a year later than originally scheduled, but each step would be bigger. The bill keeps existing rules letting the Office of Planning and Budget delay a reduction if revenue growth, prior collections, or the state's Revenue Shortfall Reserve do not meet set benchmarks. The law would take effect July 1, 2025, and apply to tax years starting on or after January 1, 2026.

• Increases the size of each annual state income tax rate cut from 0.10 percent to a full 1 percent, speeding up the phase-down.
• Changes the eventual target rate for Georgia's income tax from 4.99 percent down to 0 percent, meaning the tax could be fully eliminated over time.
• Moves the start date of the new reduction schedule from January 1, 2025 to January 1, 2026.
• Keeps the existing requirement that the Office of Planning and Budget report each December on whether revenue conditions allow a scheduled cut to proceed or must be delayed.
• Sets the law to take effect July 1, 2025, and apply to tax years beginning on or after January 1, 2026.

Georgia individual income taxpayers, whose state tax rate would fall faster than under current law; the Department of Revenue, which administers the tax; and state budget officials, including the Office of Planning and Budget and legislative finance committees, who track whether revenue conditions allow each year's cut to happen.

Because the annual cut grows tenfold and the ultimate target drops to zero, Georgians could see their state income tax disappear years sooner than under current law, which would also shrink state revenue used to fund schools, health care, and other public services unless growth or reserves offset the loss.

• Section 1 revises O.C.G.A. § 48-7-20(a.1) to raise the annual tax rate reduction from 0.10 percent to 1 percent.
• Section 1 changes the floor rate the reductions phase down to, from 4.99 percent to 0 percent, effectively eliminating the state income tax once reached.
• Section 1 shifts the start of the new reduction schedule from January 1, 2025 to January 1, 2026.
• Section 1 keeps the delay conditions in paragraph (2) tied to the Governor's revenue estimates, prior fiscal year collections, and the Revenue Shortfall Reserve under O.C.G.A. § 45-12-93.
• Section 1 keeps the requirement for the Office of Planning and Budget to report its determinations each December 1 to state revenue and legislative leaders.
• Section 2 sets the effective date as July 1, 2025, applicable to taxable years beginning on or after January 1, 2026.
• Section 3 repeals any conflicting laws.

1. 2025-02-18Senate Read and Referred (Senate)
2. 2025-02-13Senate Hopper (Senate)

• Colton Moore (R, SD-053)Primary sponsor

• state income tax
• tax cuts
• Georgia budget
• personal taxes