House Bill 463 (AS PASSED HOUSE AND SENATE)
By: Representatives Blackmon of the 146th, Burns of the 159th, Hatchett of the 155th, Gilliard
of the 162nd, Stephens of the 164th, and others
A BILL TO BE ENTITLED
AN ACT
To amend Title 33 and Title 48 of the Official Code of Georgia Annotated, relating to
insurance and revenue and taxation, respectively, so as to reduce the personal income tax
rate; to revise provisions relative to annual reductions of the income tax; to reduce the rates
of taxation on corporate and partnership income; to increase the amounts of the standard and
dependent deductions from state taxable income for individuals; to provide for an increase
in the amount of retirement income that may be excluded from state taxable income for
individuals 65 or older; 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 automatic repeal; to provide for prospective annual increases in the amounts of
such deductions; to repeal income tax credits for manufacturers of medical equipment and
supplies, pharmaceuticals, medicine, and personal protective equipment, alternative fuel,
low-emission, and zero-emission vehicles and electric vehicle chargers, businesses
headquartered in this state, businesses engaged in manufacturing cigarettes for exportation,
business enterprises that purchase or lease a motor vehicle to provide transportation for
employees, base year port traffic increases, and teleworking expenses; to repeal the state
sales tax and use exemptions for the rental of videotape or motion picture film, printed
advertising inserts or supplements, machinery or equipment used to reduce air or water
pollution, high-technology company computer equipment, data center equipment, sales of
machinery, equipment, and materials used in the construction or operation of certain
buildings; to allow for the continued use of a certificate of exemption issued prior to the date
of repeal relating to the sale of machinery and equipment used for the primary purpose of
reducing or eliminating air or water pollution; to amend Part 1 of Article 4 of Chapter 12 of
Title 45 of the Official Code of Georgia Annotated, relating to management of budgetary and
financial affairs, so as to change provisions relative to surplus funds of the Revenue Shortfall
Reserve; to provide for conforming changes; to provide for related matters; to provide for an
effective date and applicability; to provide a short title; to repeal conflicting laws; and for
other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
PART I
SECTION 1-1.
This Act shall be known and may be cited as the "Georgia Economic Growth and Tax Relief
Act of 2026."
PART II
SECTION 2-1.
Title 48 of the Official Code of Georgia Annotated, relating to revenue and taxation, is
amended in Code Section 48-7-20, relating to individual tax rates, credit for withholding and
other payments, and applicability to estates and trusts, by revising subsection (a.1) as
follows:
"(a.1)(1) On and after January 1, <del>2025</del> <ins>2026,</ins> the tax imposed pursuant to subsection (a)
of this Code section shall be <del>5.19 percent</del> <ins>4.99 percent</ins> for taxable years beginning on or
after January 1, <del>2025</del> <ins>2026;</ins> provided, however, that such rate shall be reduced by <del>0.10
</del> <ins>0.125</ins> percent annually beginning on January 1, <del>2026</del> <ins>2027,</ins> until the rate reaches <del>4.99
percent,</del> <ins>3.99 percent;</ins> provided that such annual reductions in the tax rate shall be <del>subject
</del>
<del>to delays as provided in paragraph (2) of this subsection</del> <ins>delayed by one year for each
year that prospective annual reductions in the standard deduction are delayed for any of
the reasons provided in paragraph (1.1) of subsection (a) of Code Section 48-7-27.
</ins> <del>(2) Each prospective annual reduction in the tax rate that would otherwise occur as
provided in paragraph (1) of this subsection shall be delayed by one year for each year
that any of the following are true as of December 1:
(A) The Governor's revenue estimate for the succeeding fiscal year is not at least 3
percent above the Governor's revenue estimate for the present fiscal year;
(B) The prior fiscal year's net revenue collection was not higher than each of the
preceding three fiscal years' net tax revenue collection; or
(C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not
contain a sum that exceeds the amount of the decrease in state revenue projected to
occur as a result of the prospective reduction in the tax rates set to occur the following
year.
(3) The Office of Planning and Budget shall make the determinations necessary to
implement the provisions of paragraph (2) of this subsection and shall report its
determinations by December 1 of each year to the department, the Speaker of the House
of Representatives, the President of the Senate, and the chairpersons of the House
Committee on Appropriations Committee, the House Committee on Ways and Means
Committee, the Senate Appropriations Committee, and the Senate Finance Committee.
This paragraph shall not be applicable after the final reduction to the rate of 4.99 percent
occurs."
</del> SECTION 2-2.
Said title is further amended by revising subsection (b) of Code Section 48-7-26, relating to
personal exemptions, as follows:
"(b) Each taxpayer shall be allowed as a deduction in computing his or her Georgia taxable
income a personal exemption in the amount of <del>$4,000.00</del> <ins>$5,000.00</ins> for each dependent of
such taxpayer; <ins>provided, however, that such deduction shall be increased by $125.00
annually beginning on January 1, 2027, until such deduction reaches $6,000.00, provided
that such increases in such deduction shall be subject to the same delays as those applied
to standard deductions as provided in paragraph (1.1) of subsection (a) of Code Section
48-7-27."
</ins> SECTION 2-3.
Said title is further amended in subsection (a) of Code Section 48-7-27, relating to
computation of taxable net income, by revising the introductory language and paragraph (1),
by adding a new paragraph and a new division, and by revising divisions (a)(5)(A)(xii) and
(a)(5)(A)(xiii) as follows:
"(a) Georgia taxable net income of an individual shall be the taxpayer's federal adjusted
gross income, as defined in the <del>United States</del> Internal Revenue Code of 1986, less:
(1) At the taxpayer's election, either:
(A) The sum of all itemized nonbusiness deductions used in computing such taxpayer's
federal taxable income; or
(B) A standard deduction in an amount as follows:
(i) In the case of a married couple filing a joint return, <del>$24,000.00</del> <ins>$30,000.00;
provided, however, that such deduction shall be increased by $750.00 annually
beginning on January 1, 2027, until such deduction reaches $36,000.00, provided that
such increases in such deduction shall be subject to delays as provided in paragraph
(1.1) of this subsection;</ins> or
(ii) In the case of a single taxpayer, head of household, or married taxpayer filing a
separate return, <del>$12,000.00</del> <ins>$15,000.00; provided, however, that such deduction shall
be increased by $375.00 annually beginning on January 1, 2027, until such deduction
</ins>
<ins>reaches $18,000.00, provided that such increases in such deduction shall be subject
to delays as provided in paragraph (1.1) of this subsection;
(1.1)(A) Each prospective increase in the standard deduction that would otherwise
occur as provided in divisions (i) and (ii) of subparagraph (B) of paragraph (1) of this
subsection shall be delayed by one year for each year that any of the following are true
as of December 1:
(i) The Governor's revenue estimate for the succeeding fiscal year is not at least 3
percent above the Governor's revenue estimate for the present fiscal year;
(ii) The prior fiscal year's net revenue collection was not higher than each of the
preceding three fiscal years' net tax revenue collection; or
(iii) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not
contain a sum that exceeds the amount of the decrease in state revenue projected to
occur as a result of the prospective reduction in the tax rates set to occur the following
year.
(B) The Office of Planning and Budget shall make the determinations provided in
subparagraph (A) of this paragraph and shall report its determinations by December 1
of each year to the department, the Speaker of the House of Representatives, the
President of the Senate, and the chairpersons of the House Committee on
Appropriations, the House Committee on Ways and Means, the Senate Appropriations
Committee, and the Senate Finance Committee. This paragraph shall not be applicable
after the final increases in the standard deductions provided under divisions (i) and (ii)
of subparagraph (B) of paragraph (1) of this subsection occur;"
</ins> "(xii) For taxable years beginning on or after January 1, 2008, and prior to January
1, 2012, retirement income from any source not to exceed an exclusion amount of
$35,000.00; <del>and
</del> (xiii) For taxable years beginning on or after January 1, 2012, <ins>and ending on or
before December 31, 2026,</ins> retirement income from any source not to exceed an
exclusion amount of $35,000.00 for each taxpayer meeting the eligibility requirement
set forth in division (i) or (ii) of subparagraph (D) of this paragraph or an amount of
$65,000.00 for each taxpayer meeting the eligibility requirement set forth in division
(iii) of subparagraph (D) of this paragraph; <ins>and
(xiv) For taxable years beginning on or after January 1, 2027, retirement income from
any source not to exceed an exclusion amount of $35,000.00 for each taxpayer
meeting the eligibility requirement set forth in division (i) or (ii) of subparagraph (D)
of this paragraph or an amount of $70,000.00 for each taxpayer meeting the eligibility
requirement set forth in division (iii) of subparagraph (D) of this paragraph."
</ins> SECTION 2-4.
Said title is further 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 of qualified overtime compensation, as such term is
defined in Section 225 of the Internal Revenue Code, up to $1,750.00 received by a
full-time employee paid by an hourly wage.
(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 of qualified overtime compensation received by
full-time employees paid by an hourly wage and the total number of employees to
</ins>
<ins>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 $1,750.00 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.
(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.
</ins>
<ins>(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> PART III
SECTION 3-1.
The collection of funds set aside for taxpayer relief pursuant to this part shall be known and
may be cited as the "Taxpayer Relief Fund."
SECTION 3-2.
Part 1 of Article 4 of Chapter 12 of Title 45 of the Official Code of Georgia Annotated,
relating to management of budgetary and financial affairs, is amended by revising Code
Section 45-12-93, relating to revenue shortfall reserve, reservation of surplus state funds,
appropriation and release of funds, and limitations, as follows:
"45-12-93.
(a) There shall be a reserve of state funds known as the 'Revenue Shortfall Reserve.'
(b) The amount of all surplus in state funds existing as of the end of each fiscal year shall
be reserved and added to the Revenue Shortfall Reserve. Funds in the Revenue Shortfall
Reserve shall carry forward from fiscal year to fiscal year, without reverting to the general
fund at the end of a fiscal year. The Revenue Shortfall Reserve shall be maintained,
accumulated, appropriated, and otherwise disbursed only as provided in this Code section.
(c) For each existing fiscal year, the General Assembly may appropriate from the Revenue
Shortfall Reserve an amount up to 1 percent of the net revenue collections of the preceding
fiscal year for funding increased K-12 needs.
(d) The Governor may release for appropriation by the General Assembly a stated amount
from funds in the Revenue Shortfall Reserve that are in excess of <del>4</del> <ins>8</ins> percent of the net
revenue of the preceding fiscal year.
(e) As of the end of each fiscal year, an amount shall be released from the Revenue
Shortfall Reserve to the general fund to cover any deficit by which total expenditures and
contractual obligations of state funds authorized by appropriation exceed net revenue and
other amounts in state funds made available for appropriation.
(f) <del>The combined Revenue Shortfall Reserve and the Midyear Adjustment Reserve
existing on May 9, 2005, shall become the Revenue Shortfall Reserve provided for in this
Code section.
(g) Any other provision of law notwithstanding, the General Assembly is authorized to
appropriate $7 million for State Fiscal Year 2005 from the Revenue Shortfall Reserve.
(h)</del> The Revenue Shortfall Reserve shall not exceed <del>15</del> <ins>20</ins> percent of the previous fiscal
year's net revenue for any given fiscal year. <ins>Any amount of undesignated surplus funds in
excess of 20 percent of the previous fiscal year's net revenue may be used for tax relief
pursuant to Acts of the General Assembly."
</ins> PART IV
SECTION 4-1.
Said title is further amended by repealing and reserving Code Section 48-7-29.11, relating
to tax credits for eligible teleworking expenses.
SECTION 4-2.
Said title is further amended by repealing Code Section 48-7-40.1A, relating to tax credits
for personal protective equipment manufacturers.
SECTION 4-3.
Said title is further amended by repealing Code Section 48-7-40.1B, relating to tax credits
for manufacturers of medical equipment and supplies, pharmaceuticals, and medicine.
SECTION 4-4.
Said title is further amended by repealing and reserving Code Section 48-7-40.15, relating
to tax credits for base year port traffic increases.
SECTION 4-5.
Said title is further amended by repealing Code Section 48-7-40.15A, relating to tax credit
for employer with base year port traffic increases.
SECTION 4-6.
Said title is further amended by repealing and reserving Code Section 48-7-40.16, relating
to tax credits for alternative fuel, low-emission, and zero-emission vehicles and electric
vehicle chargers.
SECTION 4-7.
Said title is further amended by repealing and reserving Code Section 48-7-40.18, relating
to tax credits for businesses headquartered in state and full-time jobs.
SECTION 4-8.
Said title is further amended by repealing and reserving Code Section 48-7-40.20, relating
to tax credits for businesses engaged in manufacturing cigarettes for exportation.
SECTION 4-9.
Said title is further amended by repealing and reserving Code Section 48-7-40.22, relating
to tax credits for business enterprises that purchase or lease a motor vehicle to provide
transportation for employees.
SECTION 4-10.
Said title is further amended by repealing and reserving paragraphs (24), (61), and (69),
repealing paragraph (33.1), and repealing and reenacting paragraph (36) of Code Section
48-8-3, relating to exemptions relative to state sales and use taxes, to read as follows:
<ins>"(36) After the effective date of this Act, no new certificates of exemption from sales and
use tax for the sale of machinery and equipment or repair, replacement, or component
parts for such machinery and equipment which is used for the primary purpose of
reducing or eliminating air or water pollution shall be issued pursuant to the former
provisions of this paragraph as such provisions existed prior to the effective date of this
Act; provided, however, that any certificate of exemption issued prior to the effective
date of this Act shall continue to be governed by the provisions of this paragraph as such
provisions existed immediately prior to the effective date of this Act;"
</ins> PART V
SECTION 5-1.
This Act shall become effective upon its approval by the Governor or upon its becoming law
without such approval and shall be applicable to all taxable years beginning on or after
January 1, 2026.
SECTION 5-2.
All laws and parts of laws in conflict with this Act are repealed.