Georgia House backs state income tax and property tax cuts in unanimous votes

Governor Brian Kemp and state leaders announce a one-time supplement for state employees, public school teachers and staff, along with University System of Georgia employees at the State Capitol in Atlanta on Monday, December 18, 2023. (Matthew Pearson/WABE)

The Georgia House on Thursday passed bills to cut state income and local property taxes, backing priorities of Gov. Brian Kemp and House Speaker Jon Burns.

The bills would accelerate an already-planned income tax cut, increase homeowner property tax exemptions in some jurisdictions and raise the amount parents can deduct per child from yearly income taxes.

Election-year tax cuts are always popular among Republicans, and all 236 state House and Senate seats are on the ballot this year. Even though growth in state tax collections is slowing, Georgia can afford tax cuts because the state budgeted to spend much less than what it will collect in taxes and had $10.7 billion in unallocated surplus at the end of the last budget year.

Representatives voted 165-0 to pass House Bill 1015, sending it to the Senate for more debate. Kemp and other Republican leaders back the measure to roll back the state income tax rate to 5.39%, retroactive to Jan. 1. As of that date, Georgia gained a flat income tax rate of 5.49%, passed under a 2022 law that transitioned away from a series of income brackets that topped out at 5.75%.

The income tax rate is supposed to drop 0.1% a year until reaching 4.99%, if state revenues hold up. The plan to drop the rate from 5.49% to 5.39%, announced in December would cost an additional $300 million. That’s on top of the $800 million the state is projected to forgo as part of the earlier tax cut.

House members also voted 165-0 for House Bill 1021, which would raise the amount that taxpayers could deduct for dependents to $4,000 from the current $3,000. With Georgia’s income tax rate currently at 5.49%, that works out to as much as $55 more per dependent, or about $150 million statewide.

“With the rising cost of groceries, child care costs and numerous other things that parents are responsible for, this will once again prove that the people of Georgia are looking for pro-family policies and we are leading the way,” said Rep. Lauren Daniel, a Locust Grove Republican.

The House also voted 162-0 for House Bill 1021, which would reduce local property taxes for some homeowners. The bill would need a two-thirds majority to pass the Senate and then must be approved by voters in a statewide referendum in November.

The measure would increase the statewide homestead tax exemption to $4,000 from the current $2,000. Rep. Matt Reeves, a Duluth Republican, said that could save homeowners $100 a year on their property taxes to local governments and schools.

“This gives good tax relief at a time that’s needed for people to buy their first home here in Georgia,” Reeves said.

However, the measure wouldn’t apply in all counties. Some counties have local homestead tax legislation that doesn’t allow for the statewide exemption to be added on top of the local exemption. It’s unclear how many homeowners the measure would affect, but House Republicans estimate it would save homeowners statewide something less than $100 million a year.

Senators are likely to counter with a plan that would cap the rate at which assessed property values could rise for tax purposes, which could limit future property tax increases.