A pair of bills projected to save Georgians and businesses about $500 million on income taxes next year won final approval Wednesday in the state Senate.
One bill, touted by Gov. Brian Kemp before the session — House Bill 1015 — would speed up plans first passed in 2022 to gradually reduce the state income tax rate on individuals from 5.75% to 4.99%.
The rate dropped to 5.49% in January, and HB 1015, if signed by Kemp as expected, would drop it to 5.39%.
That may not sound like a lot, but state officials project the change would save taxpayers — and cost the state — about $360 million next year.
“By this bill, we are continuing to conservatively manage our budget and put money back into the hands of Georgians,” said Sen. Bo Hatchett, a Republican from Cornelia and a floor leader for Kemp.
HB 1015 passed 40-12. The bill was one of House Speaker Jon Burns’ top priorities this session.
Individual income taxes are the state’s top source of revenue to fund for schools, public health, policing, courts and dozens of other functions.
The second bill — House Bill 1023 — would tie the corporate income tax rate to the individual rate, dropping it from 5.75% to 5.39%. That would save businesses $127 million to $175 million next year, according to state estimates.
Senate Finance Chairman Chuck Hufstetler, R-Rome, said the corporate income tax rate was the same as the individual income tax rate for decades. That changed in 2022 when lawmakers passed the bill cutting rates on individuals.
The bill passed 34-17.
Both measures now go to Kemp for his signature.
Lt. Gov. Burt Jones, the Senate’s president, praised the vote.
“Eliminating the state income tax has always been a priority of mine,” Jones said. “These tax cuts are a step in the right direction and put money back into the pockets of hard working Georgia taxpayers.”
Cutting taxes is one of lawmakers’ favorite pastimes in an election year when the entire General Assembly goes before voters. The 2022 bill to begin gradually lowering the income tax rate was passed during a heated reelection campaign for Kemp and other state officials.
Legislative leaders are cognizant that they are cutting taxes — and revenue — at a time when the growth in tax collections has stalled. Revenue in February was off 4.3%, and Kemp’s budget proposals for the coming year predict a continued slowing.
However, Kemp and lawmakers are spending like it’s a boom time because the state ran record surpluses for three consecutive fiscal years after the COVID-19 shutdown. The state started the 2024 session with $16 billion in “rainy day” and undesignated reserves.
Last month, Kemp signed a record midyear budget that runs through June 30 and includes $5 billion in new spending, including money for massive renovations on Capitol Hill, a new medical school at the University of Georgia, a new state prison and miles and miles of roads.
The Georgia House passed and the Senate will do so shortly a slightly less ambitious fiscal 2025 budget that still includes 4% raises for many state workers and more money for law enforcement, education and mental health programs.
