The House Committee on Ways & Means offers the following substitute to HB 1370:
A BILL TO BE ENTITLED
AN ACT
To amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated,
relating to imposition, rate, computation, exemptions, and credits for state income tax, so as
to exclude a portion of overtime compensation and cash tips from taxation; to provide for
reporting by employers; to provide for rules and regulations; to provide for definitions; to
provide for automatic repeal; to provide for related matters; to provide for an effective date
and applicability; to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to
imposition, rate, computation, exemptions, and credits for state income tax, is amended in
subsection (a) of Code Section 48-7-27, relating to computation of taxable net income, by
striking "and" at the end of paragraph (14), by replacing the period at the end of paragraph
(15) with a semicolon, and by adding new paragraphs to read as follows:
<ins>"(16)(A) For all taxable years beginning on or after January 1, 2026, and ending on
December 31, 2028, any amount up to $2,500.00 received by a full-time employee paid
by an hourly wage as compensation for work performed in excess of 40 hours a week,
</ins>
<ins>and any amount paid as overtime compensation in accordance with the federal Fair
Labor Standards Act of 1938.
(B) Notwithstanding subparagraph (A) of this paragraph, for employers governed by
the federal National Railway Labor Act, the exemption provided in this paragraph shall
apply to hourly component overtime compensation as defined in applicable collective
bargaining agreements.
(C) For each tax year beginning on or after January 1, 2026, and ending on
December 31, 2028, each employer shall submit to the department, on forms prescribed
by the department, the total amount received by full-time employees paid by an hourly
wage as compensation for work performed in excess of 40 hours a week and the total
number of employees to which such compensation was paid. The data shall be
provided monthly or quarterly and shall be due no later than the due date for the
corresponding monthly or quarterly withholding tax returns, except that such data may
be provided at the end of the year for the 2026 tax year.
(D) The department may require additional information of employers and shall be
authorized to adopt rules and regulations to provide for the administration of this
paragraph.
(E) This paragraph shall stand repealed and reserved on December 31, 2028; and
(17)(A) For all taxable years beginning on or after January 1, 2026, any amount up
to $2,500.00 received in cash tips.
(B) For each tax year beginning on or after January 1, 2026, each employer shall
submit to the department, on forms prescribed by the department, the total amount
received by employees in cash tips and the total number of employees to which such
compensation was paid. The data shall be provided monthly or quarterly and shall be
due no later than the due date for the corresponding monthly or quarterly withholding
tax returns, except that such data may be provided at the end of the year for the 2026
tax year.
</ins>
<ins>(C) The department may require additional information of employers and shall be
authorized to adopt rules and regulations to provide for the administration of this
paragraph.
(D) As used in this paragraph, the term:
(i) 'Cash tips' means cash received by an individual in an occupation that customarily
and regularly receives tips, including tips received from customers that are paid in
cash or charged and, in the case of an employee, tips received under any tip-sharing
arrangement, but only if such amount is paid voluntarily without any consequence in
the event of nonpayment, is not the subject of negotiation, and is determined by the
payor.
(ii) 'Occupation that customarily and regularly receives tips' means any occupation
which has been designated as such and given a Treasury Tipped Occupation Code as
set forth in the Federal Register by the secretary of the treasury of the United States.
Occupations excluded under Section 63 of the Internal Revenue Code shall also be
excluded for purposes of this paragraph.
(E) This paragraph shall stand repealed and reserved on December 31, 2028."
</ins> SECTION 2.
This Act shall become effective on July 1, 2026, and shall be applicable to all taxable years
beginning on or after January 1, 2026.
SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.