Senate · Introduced · 2025-2026 Regular Session

SB 520: State Income Tax Rates; revise; Code Section 20-2A-4; repeal and reserve

Last action February 18, 2026 · Senate Read and Referred

A Georgia Senate bill would replace the state's flat income tax with graduated tax brackets starting in 2027, sharply raise the state's cigarette and vaping taxes, and end the tax credit for donations to private school scholarship funds.

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In plain language

Georgia currently taxes personal income at a single flat rate that has been stepping down each year, and gives a tax credit to people and businesses who donate to student scholarship organizations that fund private school tuition. This bill would replace the flat rate with income brackets: for a single filer, 2 percent on the first $15,000, 4 percent up to $30,000, and 6 percent above that (thresholds are doubled for married couples filing jointly), starting with tax years beginning January 1, 2027. It sets a flat 6 percent corporate income tax rate, removes the option to itemize deductions, raises the standard deduction to $17,000 for singles and $34,000 for married couples, and phases that deduction down for higher earners. It roughly quintuples the child tax credit to $1,250 per child and makes it refundable, and creates a new refundable state earned income tax credit equal to 20 percent of the federal credit. The bill also ends the student scholarship organization tax credit and related reporting requirements, and raises the cigarette tax from 37 cents to $1.96 per pack while replacing separate tobacco and vaping tax categories with a single 28 percent wholesale tax. The act would take effect July 1, 2026, applying to tax years beginning on or after January 1, 2026.

What the bill does

Replaces Georgia's flat personal income tax rate with graduated brackets of 2, 4, and 6 percent based on income level, starting with tax years beginning January 1, 2027.
Sets a flat 6 percent corporate income tax rate instead of tying it to the individual rate.
Eliminates the option to itemize nonbusiness deductions and raises the standard deduction to $17,000 (single) or $34,000 (married joint), phased down for higher incomes.
Increases the child tax credit from $250 to $1,250 per qualifying child and makes it refundable so families can get money back even if they owe no tax.
Creates a new state earned income tax credit equal to 20 percent of a taxpayer's federal earned income credit, also refundable.
Repeals the tax credit for donations to student scholarship organizations and removes related reporting and penalty rules, and raises tobacco and vaping excise taxes, including nearly quintupling the cigarette tax.

Who it affects

Individual Georgia taxpayers across income levels, especially lower and middle earners who would see new brackets and a bigger standard deduction; parents claiming the child tax credit; low income workers eligible for the new earned income credit; corporations doing business in Georgia; donors and organizations involved in student scholarship programs; and buyers and sellers of cigarettes, cigars, and vaping products.

Why it matters

Georgians would see their income taxed differently depending on how much they earn rather than at one flat rate, families with children could get a much larger tax credit refunded to them, and smokers and vapers would pay significantly more at checkout. Donors who fund private school scholarships would lose the associated tax credit.

Key provisions

Section 1 rewrites O.C.G.A. § 48-7-20 to create income brackets: 2 percent, 4 percent, and 6 percent, with different income thresholds for joint versus single filers, starting January 1, 2027.
Section 2 sets a flat 6 percent corporate income tax rate under O.C.G.A. § 48-7-21, no longer tied to the individual rate.
Section 4 repeals itemized nonbusiness deductions and raises the standard deduction to $17,000 (single) or $34,000 (joint), with a 25 percent reduction for income above $140,000 (single) or $280,000 (joint).
Section 5 repeals and reserves O.C.G.A. § 48-7-29.16, the student scholarship organization tax credit.
Section 6 raises the child tax credit under O.C.G.A. § 48-7-29.27 from $250 to $1,250 per child and makes it refundable.
Section 7 creates a new refundable earned income tax credit equal to 20 percent of the federal credit under new Code Section 48-7-29.29.
Section 8 rewrites tobacco and vaping tax rates in O.C.G.A. § 48-11-2, setting cigars, loose tobacco, and vapor products at 28 percent of wholesale cost and raising the cigarette tax from 37 cents to $1.96 per pack, adjusted annually for inflation.
Sections 9 and 10 repeal the requirement that student scholarship organizations be listed for the General Assembly and remove a related penalty for noncompliant organizations.

From the bill

“With a Georgia taxable net income of up to $15,000.00, 2 percent for taxable years beginning on or after January 1, 2027”
Sets the lowest income tax bracket for single filers and heads of household.

“a taxpayer shall be allowed a credit against the tax imposed by Code Section 48-7-20 in an amount equal to 20 percent of the federal credit that such taxpayer is allowed under Section 32 of the Internal Revenue Code”
Creates a new state earned income tax credit tied to the federal credit.

Status timeline

2026-02-18Senate Read and Referred (Senate)
2026-02-17Senate Hopper (Senate)

Topics

income taxes
tax brackets
child tax credit
cigarette and vaping taxes
school scholarship tax credits

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