Tax cuts and refunds worth more than $2 billion to Georgians cleared their first significant hurdle in the General Assembly on Wednesday.
The House Ways and Means Committee approved House Bill 111, which would reduce the state’s income tax rate for individuals and corporations. It also approved House Bill 112, which would give individual taxpayers an income tax refund later this year.
Supporters said the state’s careful spending practices have allowed it to return money to taxpayers.
“We’ve been good fiscal stewards of the taxpayer dollars here in Georgia, governed conservatively while also increasing the dollars that go to our education system,” said Rep. Trey Kelley, R-Cedartown.
The tax refund passed the committee unanimously. But several Democrats voted against the separate tax rate cut. One of them, Rep. Spencer Frye, D-Athens, said he supported the tax cut for individuals but objected to giving corporations the same reduction.
Both measures are top priorities for Gov. Brian Kemp. He wants to return to taxpayers some of the $16.5 billion in budget reserves Georgia has accumulated in recent years.
HB 112 would refund taxes to individuals who filed income tax returns in 2023 and 2024. Individuals or married people filing separately would receive a refund of up to $250. Heads of household would get up to $375, while married couples filing jointly would receive up to $500.
The refund is expected to drain about $1.2 billion from the state’s reserve fund.
HB 111 would accelerate tax cuts originally approved in 2022, reducing the income tax rate for individuals and corporations from 5.39% to 5.19% for 2025. If certain financial benchmarks are met, the rate would fall to 4.99% by 2027 — two years ahead of the original schedule.
The Georgia State University Fiscal Research Center estimates the tax cut would cost the state about $1 billion through fiscal year 2026, which begins in July. The annual cost would be an estimated $724.7 million in 2027, rising to $827.9 million by 2030.
The tax rate cut has prompted some pushback from Democrats and the left-leaning Georgia Budget and Policy Institute. An analysis by the group found the top 1% of earners — those making more than $769,300 a year — would see an average tax cut of $2,787 per year. The bottom 20% of earners — those making $24,400 a year or less — would get an average tax cut of $10 a year.
The politics of tax cuts were on display at Wednesday’s meeting. Frye said individual Georgians would need tax relief because of tariffs imposed by the Trump administration.
“The tariffs are already taking effect that the federal Republicans put in place,” Frye said at the meeting.
Kelley responded that the tax cuts were needed because of “inflation caused by the previous (Democratic) administration in Washington.”
Despite the partisan barbs, both tax measures are likely to pass the Republican-controlled General Assembly. They now go to the rules committee, which will determine when they get a vote by the full House of Representatives.
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