On April 18, Georgia Governor Brian Kemp signed several bills into law, making significant amendments to the state’s tax code. The two most significant changes lower the flat individual income tax rate and align the corporate income tax rate with the individual income tax rate.
H.B. 1015 (Act 378) lowers the flat individual income tax rate for 2024 from 5.49 percent to 5.39 percent. The bill also accelerates the speed of future individual income tax rate reductions, with the possibility that the rate could now reach the target of 4.99 percent by 2028 instead of 2029.
However, this policy is incremental and relatively conservative, aiming to prevent revenue shortfalls that might result from reducing the individual income tax rate. Even if Georgia achieves its target in 2028, it will likely only have the 17th lowest individual income tax rate in the nation (currently the 19th lowest), without considering potential changes in other states.
H.B. 1023 (Act 376) aligns Georgia’s corporate income tax rate with the individual income tax rate, effective this year. Consequently, this year’s corporate income tax rate in the state will be 5.39 percent instead of 5.75 percent. With this policy change, Georgia expands the ranks of states where individual and corporate income tax rates are equal.
Other tax changes include H.B. 581 (Act 379), which allows counties to limit the growth of property values to the inflation rate and institutes an additional local option sales tax of up to 1 percent for local governments to pay for the property tax relief measure, effective January 1, 2025.
These changes reflect Georgia’s commitment to promoting responsible financial citizenship by making its tax code more structurally sound. By lowering individual income tax rates and aligning corporate income tax rates with individual rates, the state is taking a step towards a more equitable tax system.
For more information on these changes, visit https://taxfoundation.org/blog/georgia-tax-reform/.