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:
<ins>"(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
</ins>
<ins>(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.
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<ins>(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.
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<ins>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."
</ins> SECTION 2.
All laws and parts of laws in conflict with this Act are repealed.