Augusta, GA – Georgia lawmakers have passed legislation that promises both income tax rebates and further tax cuts, marking a significant shift in the state’s tax policy. The measures, which were backed by Governor Brian Kemp, passed the state Senate last Thursday with bipartisan support for the rebates but divided opinions on the proposed tax rate reduction.

The new legislation includes House Bill 112, which provides income tax rebates of up to $500 to Georgia residents, marking the third consecutive year the state will issue such rebates. The rebates, which will automatically be sent to taxpayers, are expected to return up to $250 for single individuals, $375 for heads of households, and $500 for married couples filing jointly. However, the total rebate will be capped at the amount of taxes a person paid in 2023, meaning some lower-income residents could see smaller rebates or none at all.

Meanwhile, House Bill 111, which was also passed by the Senate in a 30-23 vote, calls for a further reduction in the state income tax rate, lowering it from 5.29% to 5.19% for all income earned in 2025. This cut, which would be retroactive to January 1, 2025, is part of a larger plan to eventually reduce the income tax rate to 4.99%. Governor Kemp and Republican lawmakers have advocated for accelerating the tax cuts ahead of the original schedule, citing the state’s $11 billion budget surplus and the need to provide relief for Georgians facing rising costs.

Supporters of the tax cuts, including State Senator Bo Hatchett, a Republican from Cornelia, argue that these changes will help Georgia residents manage the high cost of living. “At a time of sky-high prices, these bills are putting money back in the hands of Georgians,” Hatchett said after the bill’s passage.

However, the proposed tax changes have faced strong opposition from Democrats, who argue that the benefits disproportionately favor wealthier residents. Senator Elena Parent, a Democrat from Atlanta, voiced concern that the tax cuts would further benefit the state’s highest earners, leaving low- and middle-income residents with little relief. “It delivers outsized benefits to Georgians already at the top of the income ladder, who earn the highest incomes,” Parent said. “We should not be passing this bill. We should focus on services that benefit hardworking Georgians.”

The proposed tax rate reduction is expected to cost the state an estimated $149 million in the fiscal year ending June 30, 2025, with the long-term impact projected to be $744 million annually. While most taxpayers will see minimal benefits from the rate cut—such as a $30 reduction for an individual earning $44,000 annually—higher-income earners will see larger savings. The Institute on Taxation and Economic Policy estimates that two-thirds of the benefits from the tax cuts will flow to the wealthiest 20% of Georgia residents.

Senator Derek Mallow, a Democrat from Savannah, emphasized that the revenue lost from these cuts could be better used to support essential public services. “If I’m talking about working for poor folks in the state, trying to help some of the folks that are in my district, it’s ‘Oh no, we have no money for child care; we have no money for this; we have thoughts and prayers,’” Mallow said.

Despite the concerns raised by Democrats, proponents of the tax cuts argue that the state’s surplus—currently standing at $11 billion, not including the $5.5 billion rainy day fund—provides a strong financial cushion to support these changes. Governor Kemp’s office has touted the accelerated tax cuts as a way to save Georgians $7.5 billion over the next ten years.

As the legislation moves closer to being signed into law, its impact on the state’s economy and its residents will likely remain a topic of debate. While many Georgians stand to benefit from the rebates and lower tax rates, questions about how to balance tax relief with funding essential services are expected to persist, particularly as lawmakers plan further cuts in the coming years.

With Governor Kemp expected to sign the measures into law in the coming days, Georgia residents can anticipate receiving their income tax rebates in the near future, while the state prepares to implement the latest round of income tax cuts. The ongoing conversation surrounding these changes underscores the broader debate about how best to use Georgia’s growing budget surplus to meet the needs of all residents.