Republican state leaders announced Monday that they plan to fast track a planned reduction of the state’s income tax rate.
Lawmakers passed a plan last year to gradually phase in reductions to the state’s income tax rate over time if certain economic markers are met. But with the state sitting on a massive surplus, Gov. Brian Kemp and legislative leaders say they want to jump ahead in the timeline for reductions.
Instead of dropping the rate to 5.49% as planned this coming year, GOP leaders will push to lower it to 5.39%. The proposal will need to go through the legislative process.
Currently, the state’s top rate is at 5.75%. The plan passed last year called for flattening and incrementally reducing the rate to 4.99% by 2029, but the planned cuts would be delayed if revenues are not on track to be at least 3% higher than the previous year.
Accelerating the timeline means foregoing more state revenue more quickly. The state’s income tax is a major source of revenue for the budget, generating about half of all the money collected to fund schools, law enforcement, health care for the poor and disabled, and a host of other services.
Monday’s press conference was billed as a “major announcement.” But some long-time critics of the plan said the proposed change will not make a significant difference for the average Georgia household.
For people earning between $42,000 and $73,000 a year, the proposal amounts to about another $27 in savings a year, said Danny Kanso, director of legislative strategy and senior fiscal analyst at the Georgia Budget and Policy Institute.
“That’s just a tiny drop in the bucket,” Kanso said Monday. “If we want to make a meaningful difference in the lives of most Georgia families, cutting the top income tax rate is just not the way to do it.”