Georgia lawmakers give final passage to state income tax cuts and rebates
Gov. Brian Kemp speaks before signing the budget bill at the Capitol in Atlanta on Crossover Day, Thursday, March 6, 2025. (Arvin Temkar /Atlanta Journal-Constitution via AP)
ATLANTA (AP) — Georgians are on track to get another state income tax rebate and a further income tax rate cut after the state Senate on Thursday passed the measures backed by Gov. Brian Kemp.
The Republican is likely to sign the measures in the coming days, which means income tax rebates of up to $500 would be paid in coming months and Georgians would owe less when they pay their 2025 income taxes.
It would be the third consecutive year for state income tax rebates under House Bill 112, which passed the Senate 52-0.
Kemp pushed to accelerate an already-planned income tax cut under House Bill 111, which passed the Senate 30-23. It would give the state a flat income tax rate of 5.19% retroactive to Jan. 1.
State Sen. Bo Hatchett, a Cornelia Republican who carried the bill on Kemp’s behalf, said that “at a time of sky-high prices,” the bills are “putting money back in the hands of Georgians.”
While supporting the rebates, Democrats decried the income tax rate cut, saying most benefits would go to the richest taxpayers and that it would sap the state of revenue to pay for needed services.
“It delivers outsized benefits to Georgians already at the top of the income ladder, who earn the highest incomes,” said Sen. Elena Parent, an Atlanta Democrat. “So no, we should not be passing this bill. We should stop telling lies about hardworking Georgians because we don’t care about them.”
The rebates would send up to $250 back to individual taxpayers, while single people who head households could get back up to $375 and married couples could get back up to $500. No one could get back more income tax than they paid during the 2023 tax year, which means some low-income taxpayers would get less. The rebates would come automatically if the bill becomes law, without further action required by taxpayers.
The state can pay the rebates because it started the year sitting on $11 billion in surplus cash, not counting a separate $5.5 billion rainy day fund.
That surplus has made it easier to speed up income tax cuts.
A 2022 law ended the old system of tax brackets and created a flat income tax, calling for annual 0.1% cuts until reaching 4.99%. Kemp and Republican lawmakers — who have held spending down below revenue collections to build up the surplus — have pushed larger cuts ahead of the yearly schedule. This year, the income tax rate dropped to 5.29% on Jan. 1, but Kemp again called for doubling this year’s reduction, dropping it to 5.19% for all income earned in 2025.
State government would forgo an estimated $149 million in revenue in the budget year ending June 30, and then $744 million a year going forward, administration officials estimate. The impact would be small for most taxpayers — a single person making $44,000 a year would pay about $30 less.
Larger benefits would flow to higher-income taxpayers. The Institute on Taxation and Economic Policy found two-thirds of the income tax cut benefits would flow to the highest-earning 20% of Georgians. Republicans said that was only natural because most Georgians in the lowest 20% of the income distribution are mostly exempt from state income taxes.
Democratic Sen. Derek Mallow of Savannah said the revenue lost could be better used to provide services to people who will benefit little from the tax cuts.
“If I’m talking about working for poor folks in the state, trying to help some of the folks that are in my district, it’s ‘Oh no, we have no money for child care; we have no money for this; we have thoughts and prayers,’” Mallow said.
If Kemp and lawmakers again speed up cuts in 2026, Georgia could reach its target rate of 4.99% before Kemp completes his second term and leaves office.
“We are proud that with the acceleration of this tax cut, we are saving Georgians another $7.5 billion over the next ten years,” Kemp spokesperson Garrison Douglas said.
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