HB 111: Income tax; reduce rate of tax

Georgia currently taxes individual income at a flat rate that was set to be 5.39 percent for 2024 and step down by 0.10 percent each year until it reaches 4.99 percent, though those yearly cuts can be delayed if state revenue targets are not met. This bill moves the whole schedule forward by one year and lowers the starting point: the 5.19 percent rate now applies to tax years beginning on or after January 1, 2025, instead of the previously scheduled 5.39 percent for 2024. The bill keeps the same mechanism for pausing future cuts. Each planned 0.10 percent reduction can be delayed a year if the Governor's revenue estimate does not grow enough, if the prior year's tax collections were not the highest in four years, or if the state's Revenue Shortfall Reserve is not large enough to cover the expected revenue loss. The Office of Planning and Budget must report its findings on these conditions each December 1 to state leaders and legislative committees. The change takes effect July 1, 2025, and applies to tax years starting on or after January 1, 2025.

• Lowers the flat state income tax rate to 5.19 percent for tax years beginning on or after January 1, 2025, replacing the previously scheduled 5.39 percent rate for 2024.
• Moves the start of the annual 0.10 percent rate reductions to January 1, 2026, continuing until the rate reaches a floor of 4.99 percent.
• Keeps in place three conditions that can each delay a scheduled annual rate cut by one year if state revenue growth, prior collections, or reserve fund levels fall short of set thresholds.
• Requires the Office of Planning and Budget to report by December 1 each year on whether those delay conditions are met, sending findings to the Department of Revenue, legislative leaders, and finance committees.
• Sets the law's effective date as July 1, 2025, applying retroactively to tax years starting on or after January 1, 2025.

Georgia individual income taxpayers, whose state tax rate would be lower for the 2025 tax year onward; the Department of Revenue, which administers the tax; and the Office of Planning and Budget, which must evaluate and report annually on whether scheduled future rate cuts should be delayed.

Georgians filing individual income taxes would see a slightly lower state tax rate applied starting with income earned in 2025, meaning somewhat smaller tax bills or larger refunds. The built-in delay conditions mean future scheduled cuts toward 4.99 percent are not guaranteed and depend on the state's revenue performance each year.

• Section 1 revises O.C.G.A. § 48-7-20(a.1) to set the individual income tax rate at 5.19 percent for tax years beginning on or after January 1, 2025, instead of 5.39 percent for 2024.
• Section 1 shifts the start of the annual 0.10 percent rate decrease from January 1, 2025 to January 1, 2026, continuing until the rate hits 4.99 percent.
• Section 1 retains three delay triggers: insufficient revenue growth estimates, lower net tax collections than the prior three years, or an insufficient Revenue Shortfall Reserve balance.
• Section 1 requires the Office of Planning and Budget to report its determinations by December 1 each year to the Department of Revenue and legislative leadership, and states this reporting duty ends once the rate reaches 4.99 percent.
• Section 2 sets the effective date as July 1, 2025, applying to tax years beginning on or after January 1, 2025.
• Section 3 repeals conflicting laws.

1. 2025-07-01Effective Date
2. 2025-04-15Act 7
3. 2025-04-15House Date Signed by Governor (House)
4. 2025-04-07House Sent to Governor (House)
5. 2025-03-20Senate Passed/Adopted (Senate)
6. 2025-03-20Senate Third Read (Senate)
7. 2025-03-20Senate Engrossed (Senate)
8. 2025-03-18Senate Read Second Time (Senate)

• Soo Hong (R, HD-103)Primary sponsor
• Matthew Gambill (R, HD-15)
• Lauren McDonald III (R, HD-26)
• Will Wade (R, HD-9)
• Bruce Williamson (R, HD-112)
• Shaw Blackmon (R, HD-146)
• Bo Hatchett (R, SD-50)

1. PassedHouse voteMarch 6, 2025

   110 yea, 60 nay (2 not voting, 8 excused)

   PASSAGE: House Vote #196

2. PassedSenate voteMarch 20, 2025

   30 yea, 24 nay (2 not voting, 0 excused)

   MOTION TO ENGROSS: Senate Vote #252

3. FailedSenate voteMarch 20, 2025

   21 yea, 30 nay (2 not voting, 3 excused)

   MOTION TO TABLE: Senate Vote #255

4. PassedSenate voteMarch 20, 2025

   30 yea, 23 nay (1 not voting, 2 excused)

   PASSAGE: Senate Vote #256

• income tax
• tax rate cut
• state revenue
• Georgia taxes