As the 2022 legislative session came to a close, Georgia lawmakers finalized legislation (H.B. 1437) that will provide an anticipated $1 billion in individual taxpayer savings.
The bill includes a change from Georgia’s current graduated income tax, where rates increase from 1 to 5.75 percent as income increases, to a flat tax rate that declines from 5.49 to 4.99 percent in 2029. The bill also reworks Georgia’s personal exemptions with gradual increases every two years, resulting in the current deductions of $7,400 for married joint filers and $2,700 for single filers increasing up to $24,000 for married joint filers and $12,000 for single filers in 2030. Dependent exemptions would remain at $3,000.
Governor Kemp is expected to sign this bill in the coming days and the changes would take effect in the 2024 tax year. Notably, officials estimate 95 percent of Georgia personal income taxpayers will pay less taxes under H.B. 1437.
Considerations & Potential Long-Term Implications of This Bill
This bill comes in the wake of Georgia reporting an estimated $2.3 billion surplus in 2021. The proposed tax rate cuts would be delayed for any year should any of the following occur:
- Georgia tax collections do not increase by at least 3 percent,
- Actual revenue isn’t higher than each of the previous five years, or
- The state experiences a revenue shortfall that causes reserves to fall below the amount of revenue lost from the tax cuts.
For more information on this development and how it could affect your individual taxes, please contact your Bennett Thrasher tax advisor by emailing Bennett-Thrasher@btcpa.net.