Georgia’s Path Toward Eliminating the Personal Income Tax
The Peach State is considering cutting its flat personal income tax rate, through a series of phased reductions.
A recent report from the Georgia Senate Special Committee on the Elimination of Georgia’s Income Tax outlined a plan that would immediately exempt two-thirds of Georgians from personal income tax by increasing the standard deduction. The plan would also lower the current personal income tax rate of 5.19% and aim to fully eliminate the tax by 2032.
In this year’s legislative session, bills such as SB477 aim to reduce the personal income tax to 4.99% in 2026, 4.49% in 2027, and 3.99% in 2028. The corporate rate would be reduced to 4.99%, and the standard deduction would be set at $16,000 for individuals and $32,000 for those filing jointly. Additionally, HB880 is also being considered this legislative session. HB880 would reduce the flat personal income tax rate by 0.10 percentage points annually, beginning in 2026. The bill would be subject to revenue triggers, until it reaches the destination rate of 3.99%.
According to the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, the 4.99% rate would move Georgia from the 25th lowest personal income tax rate to 23rd lowest. The 3.99% rate, assuming other states’ rates do not change, would move it up to 14th (the top nine, of course, are those with zero personal income taxes).
Since 2021, 26 states have reduced their personal income tax rates. A few others have enacted plans to eliminate their personal income taxes gradually. Georgia was part of the 2022 “Flat Tax Revolution,” alongside four other states that switched from progressive to flat personal income taxes that year. The state’s progressive system had a top rate of 5.75, replaced by a flat tax at 5.39%.
But now, just a few years later, Georgia’s competitors are not standing still. Mississippi is on the path to eliminating their income taxes, subject to triggers. Louisiana joined the Flat Tax Revolution in 2024, enacting a 3% flat tax. Leaders in South Carolina are currently considering legislation to lower the state’s top personal income tax rate with triggers down to a 1.99% flat tax. North Carolina’s triggers could see the state’s income tax rate as low as 1.30% in the coming years. North Carolina also plans to phase out its corporate income tax entirely by 2030.
Georgia currently ranks a respectable 13th for Economic Outlook. But the Peach State, despite having made the switch to the flat tax and pursuing other pro-growth policies, has actually fallen from its best-ever ranking of 7th in 2015. As Georgia’s peers become more competitive on economic policy, state lawmakers can keep pace by continuing to chip away at income tax rates.