GA may eliminate the state income tax. What does this mean for your paycheck?

Georgia lawmakers and policy watchers are abuzz over the latest proposal to eliminate the state’s income tax. This move will have big impacts for workers, families, the state budget and could potentially leave taxpayers with more money and the state of Georgia with less.

What is the proposal to eliminate Georgia state income taxes?

The push to end Georgia’s income tax comes from a bipartisan state Senate committee, announced in a press release on July 17 by Lt. Gov. Burt Jones. The committee was established in hopes of keeping Georgia, “the number one state for business and keep[ing] our state competitive,” Jones said.

The goal of the committee is to explore phasing out the 5.19% state income tax over several years without cutting key services like education, health care and public safety.

Sen. Blake Tillery, chairman of the committee, told reporters at a press conference held at the Georgia State Capitol that the question is no longer if Georgia will go to a zero income tax rate, but how and when.

This effort follows several years of incremental rate cuts under Gov. Brian Kemp, including the recent HB 111, which lowered the rate from 5.39% to 5.19% for 2025 and sets up further cuts in coming years.

What does this mean for Georgia taxpayers?

Above all else, Sen. Tillery said in the press conference, if the state eliminates the income tax, “it’s about allowing hardworking Georgians to keep their money in their pockets.” If you currently have 5.19% withheld from your paycheck for state income tax, that money would show up in your take-home pay instead.

If elimination moves forward:

In the short term:

For now, the rate drop to 5.19% means small increases in most Georgians’ paychecks starting July 1, 2025, and larger refunds at tax time if over-withholding happened.

In the long term:

It still requires votes and the governor’s signature, filing state taxes would be much simpler and income tax withholding would end entirely and disappear for most residents.

What are the potential downsides?

According to the Georgia Budget and Policy Institute, Georgia’s income tax is the second-largest source of revenue and would eliminate about $15 billion annually.

Kiplinger, personal finance and business forecasting publisher, reports on the concerns:

• Gaps in the budget: Georgia could struggle to adequately fund schools, health programs and public safety. This could lead to lawmakers raising sales or property taxes to offset losses.
• Disproportionate effects: No state tax would disproportionately impact lower-income and middle-class families. The biggest dollar savings would go to the wealthiest households, widening inequality and the lowest income earners would see the smallest savings as a percentage of their income.
• Possible cuts to services: The Atlanta Journal Constitution cites Sen. Sonya Halpern (D-Atlanta), as one of the main critics that worry about potential cuts to Medicaid, food assistance, and schools if tax cuts leave a hole in the budget.

What’s next?

The Senate committee is expected to issue recommendations ahead of the 2026 legislative session. Any law to eliminate the income tax would need to pass both chambers of the General Assembly and be signed by the governor.

Changes would likely be phased in, not immediate, with 2027 as the earliest target for a complete repeal, so the debate over income tax elimination is in the early stages.

What are your thoughts about eliminating the income tax for Georgia? Email me at srose@ledger-enquirer.com or find me on social media.