Senate · Introduced · 2025-2026 Regular Session

SB520: SB520 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 tiered rates of 2, 4, or 6 percent based on income, raise the standard deduction and child tax credit, add a new earned income tax credit, and repeal the student scholarship organization tax credit while also raising tobacco and vaping taxes.

In plain language

Georgia currently taxes individual income at a single flat rate that has been gradually stepping down toward 4.99 percent. This bill would scrap that flat-rate system starting with tax years beginning in 2027 and replace it with three brackets, 2 percent, 4 percent, and 6 percent, with the income thresholds differing for joint filers and single filers or heads of household. Corporations would pay a flat 6 percent rate. The bill also removes the option to itemize nonbusiness deductions, raises the standard deduction to $34,000 for joint filers and $17,000 for others (phased down for higher earners), increases the child tax credit from $250 to $1,250 per child, and creates a new refundable earned income tax credit worth 20 percent of the federal credit. Separately, the bill repeals the state tax credit for donations to student scholarship organizations and the related reporting requirements, and raises excise taxes on cigarettes, cigars, loose tobacco, and vaping products. The changes take effect July 1, 2026, and apply to tax years beginning on or after January 1, 2026.

What the bill does

Replaces Georgia's flat individual income tax rate with three brackets (2, 4, or 6 percent) based on income and filing status, starting with tax years beginning in 2027.
Sets a flat 6 percent state income tax rate for corporations, replacing the current rate tied to the individual tax structure.
Eliminates the option to itemize nonbusiness deductions and raises the standard deduction to $34,000 for joint filers and $17,000 for single filers or heads of household.
Raises the child tax credit from $250 to $1,250 per qualifying child and keeps it refundable if it exceeds the taxpayer's tax bill.
Creates a new refundable state earned income tax credit equal to 20 percent of the federal earned income tax credit.
Repeals the state tax credit for donations to student scholarship organizations (O.C.G.A. § 48-7-29.16) and related reporting and penalty rules, and raises excise taxes on cigarettes, cigars, and vaping products.

Who it affects

Georgia individual income taxpayers across all income levels, corporations that file Georgia income taxes, families claiming the child tax credit, low-income workers eligible for the earned income tax credit, donors and organizations involved in the student scholarship organization program, and buyers and sellers of cigarettes, cigars, and vaping products.

Why it matters

Most Georgia taxpayers would see their tax bill calculated differently, with lower earners taxed at 2 or 4 percent instead of the current flat rate, while some higher earners would pay 6 percent. Families would get a much larger child tax credit, low-wage workers would gain a new refund, and smokers and vapers would pay noticeably higher taxes.

Key provisions

Section 1 replaces the flat individual income tax rate (O.C.G.A. § 48-7-20) with brackets of 2, 4, and 6 percent tied to income thresholds that differ for joint filers ($30,000 and $60,000) and single filers or heads of household ($15,000 and $30,000), starting for tax years after January 1, 2027.
Section 2 sets a flat 6 percent corporate income tax rate under O.C.G.A. § 48-7-21.
Section 4 removes the itemized deduction option and raises the standard deduction to $34,000 (joint) or $17,000 (single/head of household), phased down for higher earners.
Section 5 repeals the tax credit for donations to student scholarship organizations under O.C.G.A. § 48-7-29.16.
Section 6 raises the child tax credit under O.C.G.A. § 48-7-29.27 from $250 to $1,250 per qualifying child, refundable if it exceeds tax owed.
Section 7 adds a new O.C.G.A. § 48-7-29.29 creating a refundable earned income tax credit equal to 20 percent of the federal credit.
Section 8 raises excise tax rates under O.C.G.A. § 48-11-2 on cigarettes, cigars, loose or smokeless tobacco, and vapor products, including a new $1.96-per-pack cigarette tax indexed to inflation.
Section 11 sets the effective date as July 1, 2026, applicable to tax years beginning on or after January 1, 2026.

Status timeline

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

Topics

income tax rates
child tax credit
earned income tax credit
tobacco and vaping taxes
student scholarship tax credit