ATLANTA – Georgia residents and businesses can expect to see a reduction in their income taxes this year, thanks to a series of measures signed into law Thursday by Governor Brian Kemp. The cuts are part of Kemp's push to put more money back into the pockets of Georgians and are set to be retroactive to the start of 2021. According to WABE, Kemp said, "All of these bills help keep money where it belongs — in the pockets of our hardworking families."
The income tax cuts, which are projected to total around $700 million for residents and businesses, have managed to drum up some bipartisan support, with even some Democrats joining Republicans in backing the move. The state will also hold a vote in November to decide on capping property tax increases based on home values. This will give Georgians a chance to maintain more control over their property tax bills amid rising home values. The decision to go forward with these reductions in a time when all 236 state House and Senate seats are contested is no coincidence, as election-year tax cuts are always a crowd-pleaser.
The state's personal income tax had previously dropped to 5.49% on Jan. 1 from a tiered system maxing out at 5.75%. The goal is to gradually decrease it to 4.99%, conditioned on state revenue sustainability. In a bold move, Kemp also signed legislation accelerating the decrease, lowering the rate to 5.39% this year, allowing taxpayers to save an additional amount projected at $360 million, "on top of the $800 million in revenue the state is projected to forgo," reported WABE.
In line with individual tax cuts, Kemp has pushed to permanently lower the corporate income tax rate to match personal tax rates. This change is estimated to cost the state $176 million in its first full year and could rise up to $210 million by 2029 – a sizeable hit to state revenues, but proponents argue it's worth it to maintain fairness between individual and business taxation. Additionally, a bill was signed to increase the tax deduction for children and dependents from $3,000 to $4,000, potentially providing up to $55 more per dependent.
The financial backdrop to these tax cuts is Georgia's $10.7 billion unallocated surplus at the end of the last budget year. Kemp, in a confident assurance, conveyed that these tax breaks are feasible thanks to the state's "responsible conservative approach to budgeting," as reported by WABE. Yet, the governor's assurances butt up against economic consensus that tax reductions can often act to fuel inflation by injecting more spending power into the economy.
The ballot initiative pending this November could further transform Georgia's tax landscape by setting a cap on increases in home values for property tax assessments. This attempt to shield residents from sneaky tax hikes will let voters directly weigh in on their own financial future, addressing what many lawmakers recognize as a growing constituent concern over escalating property tax bills. Such changes underscore Kemp's overall fiscal narrative – writing the next chapter of Georgia's financial story with the individual taxpayer in mind.
