Georgia CommonsHouse · Engrossed · 2025-2026 Regular Session
HB 229: Sales and use tax; exempt materials used in construction of capital outlay projects for educational purposes; provisions
Last action March 27, 2026 · Senate Passed/Adopted By Substitute
A Senate committee substitute for HB 229 would let Georgia taxpayers exclude certain overtime pay and cash tips from state income tax for tax years 2026 through 2028, despite the bill's original title about school construction sales tax exemptions.
The summaries below were written by an AI model (claude-sonnet-5) from the text of the bill and are not part of it. Quote the text, not the summary. The stored text is the Comm Sub version, the latest the General Assembly's website lists.
In plain language
This bill, as rewritten by the Senate Committee on Finance, no longer deals with sales tax exemptions for school construction materials as its title suggests. Instead it amends Georgia's income tax law (O.C.G.A. § 48-7-27) to exclude certain overtime pay and cash tips from state taxable income. For tax years 2026 through 2028, hourly full-time employees could exclude qualified overtime compensation up to $25,000 (married filing jointly) or $12,500 (other filers) from their Georgia taxable income, with the amount phased down for higher earners. Starting in 2026, workers in tipped occupations could similarly exclude up to $25,000 in cash tips, also phased out for higher incomes, through the end of 2028. Employers would have to report overtime and tip totals to the Georgia Department of Revenue on a regular schedule, and both exclusions automatically expire (are repealed) on December 31, 2028.
What the bill does
- Excludes qualified hourly overtime pay from Georgia income tax for 2026-2028, up to $25,000 for joint filers or $12,500 for single filers, phased down for higher incomes.
- Excludes up to $25,000 in cash tips from Georgia income tax starting in 2026 through 2028, also phased down above certain income levels.
- Requires employers to report to the Georgia Department of Revenue the total overtime pay and tip amounts paid and the number of employees receiving them, on a monthly or quarterly basis.
- Gives the Department of Revenue authority to demand additional information from employers and to write rules implementing these exclusions.
- Sets both tax exclusions to automatically expire (be repealed) on December 31, 2028.
- Defines 'cash tips' and 'occupation that customarily and regularly receives tips' by reference to federal tax and Treasury tip-occupation codes.
Who it affects
Hourly full-time employees who earn overtime pay, workers in tipped occupations such as restaurant and service workers, employers who must track and report this compensation to the state, and the Georgia Department of Revenue, which administers the new exclusions and reporting rules.
Why it matters
Eligible workers would see less of their overtime pay and tips counted as taxable income on their Georgia returns for a three-year window, potentially lowering their state tax bills. Employers would face new state reporting duties, and the tax breaks are set to disappear automatically at the end of 2028 unless lawmakers act again.
Key provisions
- Section 1 adds paragraph (16) to O.C.G.A. § 48-7-27(a), excluding qualified overtime compensation for hourly workers, capped at $25,000 (joint) or $12,500 (other filers), for tax years 2026-2028.
- The overtime exclusion phases out by $100 for every $1,000 a filer's adjusted gross income exceeds $300,000 (joint) or $150,000 (other filers).
- A special rule extends the overtime exclusion to railway employees' hourly overtime as defined in their collective bargaining agreements.
- Employers must report total overtime compensation and employee counts to the Department of Revenue monthly or quarterly, with a one-time year-end option for 2026.
- Section 1 also adds paragraph (17), excluding up to $25,000 in cash tips per year starting in 2026, phased out under the same income thresholds as the overtime exclusion.
- Cash tips are defined to require voluntary payment with no penalty for nonpayment, and tipped occupations are defined using federal Treasury Tipped Occupation Codes.
- Both the overtime and tips exclusions are set to stand repealed on December 31, 2028.
- Section 2 repeals any conflicting laws.
From the bill
“any amount of qualified overtime compensation, as such term is defined in Section 225 of the Internal Revenue Code, received by a full-time employee paid by an hourly wage”
“'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”
“This paragraph shall stand repealed and reserved on December 31, 2028”
Discussed in meetings (4)
The House and Senate meetings that took this bill up, from their machine transcripts. Each account was written by Georgia Commons with AI and is not part of the record; the video is what was said.
Senate Finance Committee, March 23, 2026
From 0:27:21 · Watch on the General Assembly's Vimeo channel
Summary by Georgia Commons: The chair presented new language providing a tax exemption for tips and overtime. The chair said it was the same language the committee had previously approved and that the House had removed it from HB 1199, the federal tax conformity legislation. The chair presented it because the senator associated with the language was absent. No substantive questions or objections were raised. The committee approved the bill unanimously.
Senate Rules Committee, March 25, 2026
From 0:40:47 · Watch on the General Assembly's Vimeo channel
Summary by Georgia Commons: A committee member selected HB 229 for the calendar. No provisions were discussed. The committee unanimously approved the calendar package containing the bill.
Senate floor session, March 27, 2026 (legislative day 38)
From 1:34:34 · Watch on the General Assembly's Vimeo channel · Confirmed by the bill's status history (Senate Engrossed)
Summary by Georgia Commons: The Senate voted 31-18 to protect HB 229 and three other bills from floor amendments after an objection to unanimous consent. The clerk later read a substitute replacing the original school-construction sales tax exemption with income tax exclusions for tips and overtime compensation. The sponsor said the substitute spelled out provisions from federal tax legislation that senators had previously supported in another tax measure but that had subsequently been removed. No questions or opposition followed. The Senate adopted the substitute and passed the bill 51-0.
Status timeline
- Senate Passed/Adopted By Substitute (Senate)
- Senate Third Read (Senate)
- Senate Engrossed (Senate)
- Senate Read Second Time (Senate)
- Senate Committee Favorably Reported By Substitute (Senate)
- Senate Read and Referred (Senate)
- House Passed/Adopted By Substitute (House)
- House Third Readers (House)
Show full history (12 actions)
- House Committee Favorably Reported By Substitute (House)
- House Second Readers (House)
- House First Readers (House)
- House Hopper (House)
Sponsors
- Yasmin Neal (D, HD-79)
- Demetrius Douglas (D, HD-78)
- Alan Powell (R, HD-33)
- Steve Tarvin (R, HD-2)
- Mitchell Scoggins (R, HD-14)
- Buddy DeLoach (R, HD-167)
- Greg Dolezal (R, SD-27)
Votes
- House voteMarch 3, 2025
169 yea, 2 nay (2 not voting, 7 excused)
- Senate voteMarch 27, 2026
31 yea, 18 nay (4 not voting, 1 excused)
- Senate voteMarch 27, 2026
51 yea, 0 nay (2 not voting, 1 excused)
Topics
- income tax
- overtime pay
- tip income
- tax exemptions
- payroll reporting