In Atlanta, Georgia, the Republican governor Brian Kemp and legislative leaders Lt. Gov. Burt Jones and House Speaker Jon Burns aim to expedite the scheduled reduction in the state income tax rate. The Office of Planning and Budget projects that Georgia taxpayers could save approximately $1.1 billion in the calendar year 2024.

On Monday, Gov. Brian Kemp, Lt. Gov. Burt Jones, and House Speaker Jon Burns expressed their support for a proposal to establish a flat income tax rate of 5.39% effective January 1. “We’re keeping government streamlined and we’re giving taxpayers back their hard-earned money,” stated Kemp.

The announcement follows the reinstatement of the state’s gasoline tax, suspended by Kemp for several months. The suspension of the 31.2 cents per gallon tax expired last week.

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Current State of Georgia’s Income Tax: Brackets and Anticipated Changes

Georgia’s current income tax has various brackets, with the highest at 5.75% on earnings above $7,000 per year. A 2022 law already slated the rate to shift to a flat 5.49% on January 1. Now, if state revenues remain stable, the rate is set to decrease by 0.1% annually until reaching 4.99%.

Should lawmakers endorse Monday’s proposal, the final rate could be achieved in 2028 instead of the originally planned 2029. Despite signs of a slight revenue decline, with state tax collections poised to yield another multi-billion dollar surplus, Kemp and lawmakers advocate for accelerating the cuts by implementing a 5.39% rate in 2024. Legislative action is required in the regular session starting in January, but lawmakers can retroactively approve a tax cut effective January 1.

“When I signed the largest income tax cut in state history in 2022, I did so with the understanding we would deliver on this promise in a responsible way,” Kemp affirmed.  “Now, thanks to our conservative budgeting and strong state economy built on business-friendly policies, we are well-positioned to move the timeline up and put more money where it belongs – back into Georgians’ pockets.”

Kemp’s office estimates that the total reduction to 5.39% will decrease state tax collections by an estimated $1.1 billion, exceeding the initially projected $450 million for the smaller cut.

In addition to the rate cut, changes in the first year would raise the standard exemption for taxable income. Single taxpayers or heads of households will receive a $12,000 exemption immediately, and married couples filing jointly will see an exemption growing to $24,000 by 2030. Taxpayers can also deduct $3,000 for each child or dependent.

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Retrospect and Rebates: A Pattern of Tax Relief

Lawmakers have previously agreed to fund a $1.1 billion income tax rebate plan over the past two years, providing refunds of up to $250 for single filers, up to $375 for single adults heading households with dependents, and up to $500 for married couples filing jointly. “This is what happens when you budget conservatively,” Kemp said. “This is what happens when you think long-term rather than make knee-jerk fiscal decisions without consideration of the impact that will have on the state.”

Some Republicans advocate for the complete elimination of Georgia’s income taxes, generating $20.8 billion of the state’s $36 billion in tax revenue last year. “Today’s announcement is a great step toward ultimately eliminating Georgia’s income tax, a top priority of mine,” Jones commented.

Others reject this push but express a desire to further reduce the income tax rate by controlling tax breaks. A legislative panel reviewing tax breaks has yet to publish any recommendations.

The plan includes provisions to pause tax cuts in any year where state revenue doesn’t grow by 3%, is lower than the previous five years, or if the state needs more funds in its savings account to cover the cost. These requirements aim to ensure adequate revenue for state services.

The upcoming legislative session in January will serve as the battleground for this ambitious plan, with implications reaching far beyond tax rates into the broader realms of state finances and governance. While Kemp and Jones won’t face election next year, Georgia’s 180 state House seats and 56 state Senate seats will be on the ballot.

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