---
title: HB 229. Sales and use tax; exempt materials used in construction of capital outlay projects for educational purposes; provisions
collection: bills
id: 2025-2026/hb229
cite_as: HB 229, 2025-2026 Regular Session (Ga.)
canonical_url: https://georgiacommons.org/bills/2025-2026/hb229
md_url: https://georgiacommons.org/bills/2025-2026/hb229.md
text_url: https://georgiacommons.org/bills/2025-2026/hb229/text
source_url: https://www.legis.ga.gov/legislation/69834
date: 2026-03-27
status: engrossed
corpus_version: bills-2026-09-13
license: Public record of the Georgia General Assembly, via LegiScan; see about.md
publisher: Georgia Commons, an independent project of Georgia Civic Data. Not the State of Georgia. Not legal advice.
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omitted: votes and history
omitted_chars: 1081
omitted_url: https://georgiacommons.org/bills/2025-2026/hb229.md?full=1
bill_number: HB 229
session: 2025-2026 Regular Session
session_slug: 2025-2026
chamber: House
bill_type: bill
status_date: 2025-03-03
last_action: Senate Passed/Adopted By Substitute
sponsors:
- Yasmin Neal
- Demetrius Douglas
- Alan Powell
- Steve Tarvin
- Mitchell Scoggins
- Buddy DeLoach
- Greg Dolezal
text_version: Comm Sub
has_text: true
legiscan_url: https://legiscan.com/GA/bill/HB229/2025
upstream_id: 1955591
summaries_model: claude-sonnet-5
topic_tags:
- income tax
- overtime pay
- tip income
- tax exemptions
- payroll reporting
---
# HB 229. Sales and use tax; exempt materials used in construction of capital outlay projects for educational purposes; provisions
## Text
The Senate Committee on Finance offered the following
substitute to HB 229:
A BILL TO BE ENTITLED
AN ACT
To amend Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to
income taxes, so as to exclude tips and overtime compensation from taxation; to provide for
reporting by employers; to provide for rules and regulations; to provide for related matters;
to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to income taxes,
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 with a
semicolon at the end of paragraph (15), and by adding new paragraphs to read as follows:
"(16)(A) For all taxable years beginning on or after January 1, 2026, and ending on
December 31, 2028, 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 up to:
(i) In the case of a married couple filing a joint return, $25,000.00; or
(ii) In the case of a single taxpayer, head of household, or married taxpayer filing a
separate return, $12,500.00.
(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) The amount allowable as a deduction under subparagraph (A) or (B) of this
paragraph shall be reduced, but not below zero, by $100.00 for each $1,000.00 by
which a taxpayer's federal adjusted gross income increased by any amounts deducted
under Sections 911, 931, or 933 of the Internal Revenue Code, exceeds:
(i) In the case of a married couple filing a joint return, $300,000.00; or
(ii) In the case of a single taxpayer, head of household, or married taxpayer filing a
separate return, $150,000.00.
(D) 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 of qualified overtime compensation received by
full-time employees paid by an hourly wage 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.
(E) 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.
(F) 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 $25,000.00 received in cash tips.
(B) The amount allowable as a deduction under subparagraph (A) of this paragraph
shall be reduced, but not below zero, by $100.00 for each $1,000.00 by which a
taxpayer's federal adjusted gross income increased by any amounts deducted under
Sections 911, 931, or 933 of the Internal Revenue Code, exceeds:
(i) In the case of a married couple filing a joint return, $300,000.00; or
(ii) In the case of a single taxpayer, head of household, or married taxpayer filing a
separate return, $150,000.00.
(C) 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.
(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) 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.
(F) This paragraph shall stand repealed and reserved on December 31, 2028."
SECTION 2.
All laws and parts of laws in conflict with this Act are repealed.
## Summaries written by Georgia Commons
The following was written by claude-sonnet-5 from the text above and is not part of the bill. Quote the text, not the summary.
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.
### Plain-language summary
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 it 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.
## Status
- Status: Engrossed (2025-03-03)
- Last action: Senate Passed/Adopted By Substitute (2026-03-27)
- Sponsors: Yasmin Neal, Demetrius Douglas, Alan Powell, Steve Tarvin, Mitchell Scoggins, Buddy DeLoach, Greg Dolezal
- Official page: https://www.legis.ga.gov/legislation/69834
> The history, votes, and amendments (1,081 characters) are at https://georgiacommons.org/bills/2025-2026/hb229.md?full=1