Major Tax Bills Take Effect with Beginning of Fiscal Year 2025

Today, July 1, marks the beginning of Fiscal Year 2025, bringing several major pieces of legislation into effect in Georgia. These include:

  • House Bill 1015: Reduces the flat personal income tax rate from 5.49% to 5.39%.
  • House Bill 1023: Aligns the state’s corporate income tax rate to its personal income tax rate, reducing it to 5.39% from 5.75%.
  • House Bill 1021: Increases the state’s income tax exemption for dependents from $3,000 to $4,000 for each person claimed (such as an elderly parent or a child).

These measures will cost the state about $660 million over the 2024 calendar year, with all three measures applied retroactively as of January 1, 2024. Additionally, Senate Bill 366 will take effect on January 1, 2025. This bill requires 12 economic analyses per year on existing or proposed tax measures and helps provide greater transparency and accountability for Georgia’s system of corporate tax breaks.

Statement from Staci Fox, President and CEO, GBPI:

“Reducing Georgia’s income tax from the top down comes at a cost of $349 million to drop the personal income tax by 0.1% and a cost of $152 million to align the corporate income tax rate with the new personal rate of 5.39%. However, these measures offer less than 13% of the $501 million combined cost of the two bills to the first 60% of households earning up to $76,000 per year.”

HB 1021, which increases the state’s income tax exemption for dependents by $1,000 (a savings of up to $54 per dependent) is a positive step forward, and Senate Bill 366’s required economic analyses on tax measures offers modest improvements to the state’s tax transparency and evaluation laws. However, little relief has been directed towards those earning low-to-middle incomes, who would most benefit from more money in their pockets.  Georgia could consider more targeted measures, such as a state-level Earned Income Tax Credit or Child Tax Credit, to better support families in affording essentials.”

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