Georgia Taxpayers to See Lower Income Tax Rates and Up to $500 Back in 2025
The State of Georgia enacted two tax bills during the 2025 session that accelerate the planned reduction in the state income tax and add a new “tax credit” for taxpayers who filed returns in both 2023 and 2024. Notably, both bills were signed into law by Governor Kemp on April 15.
Rate Reduction
The first bill, HB 111, reduces the state income tax retroactively for tax year 2025 to 5.19%. Prior law had the 2025 rate set to go down from 5.39% in 2024 to 5.29% in 2025. The new legislation moves it down an additional 0.10% and overrides the requirement that the reduction be dependent on the level of state revenues. The rate will continue to drop by 0.10% each year starting in 2026 until it reaches the rate of 4.99% in 2027, if state revenues increase by a prescribed amount. In a statement, Kemp said the legislation will save Georgia taxpayers about $880 million.
Tax Refund/Credit
Under the second bill, HB 112, all Georgia taxpayers who file both 2023 and 2024 returns get a “tax credit” which is essentially like the tax rebates given by various states and the federal government in past years.
The credit amounts are as follows:
● $250 for single taxpayers
● $375 for heads of household
● $500 for married taxpayers filing jointly
The credit is not refundable so cannot exceed a taxpayer’s tax liability for those years. Estates and trusts do not qualify for the credit nor do nonresident aliens or taxpayers claimed as a dependent on another’s return. Taxpayers must file their returns for 2023 and 2024 on time, including any extensions that have been granted, to get the rebate.
The amount will be delivered as a credit or refund once a qualified taxpayer files an individual income tax return for the 2024 tax year. The refunds will be either electronically transmitted or sent by check to taxpayers, based on the taxpayer’s refund instructions. However, the refund will first be applied against any outstanding tax liability that exists for a taxpayer at the time.
For more FAQs on the tax credit, see the Georgia Department of Revenue’s information page entitled Georgia Surplus Tax Refund.
Contributors
Patrick Crouch, Audit Partner
Jeremy Jones, COO & Audit Partner
Jodi Prevost, Audit Partner
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