Major Tax Change: Georgia's Accelerated 4.99% Flat Tax (2026)
On April 2, 2026, the Georgia legislature passed HB 463 (Economic Growth and Tax Relief Act of 2026), which Governor Kemp signed shortly after. The bill accelerated Georgia's income tax cut, dropping the rate from 5.19% (2025) directly to 4.99% for 2026 — bypassing the originally scheduled 5.09% step.
Georgia's tax journey has been aggressive:
- 2022 and earlier: 6-bracket progressive system, top rate 5.75%
- 2024: Switched to flat tax at 5.49%
- 2025: Reduced to 5.19%
- 2026: 4.99% (accelerated via HB 463)
- 2027+: 0.125% annual reductions toward final 3.99% target
HB 463 Highlights: Beyond the Rate Cut
The Economic Growth and Tax Relief Act of 2026 included multiple provisions:
- Rate reduction: 5.19% → 4.99% (effective January 2026)
- Standard deduction increase: $12,000 → $15,000 (single), $24,000 → $30,000 (MFJ)
- Future deduction growth: +$375/year single, +$750/year MFJ (caps at $18K/$36K)
- OT/Tip exemption: Up to $1,750 OT premium + $1,750 tips exempt from GA tax (2026-2028)
- One-time rebate: Up to $500 for married couples (must file both 2024 and 2025 returns)
- Property tax cap: 3% or inflation, whichever is lower (statewide homestead assessment cap)
- Temporary gas tax suspension: 33¢/gallon reduction March 20 - May 19, 2026
Why Georgia Has No Local Income Tax
Unlike Ohio, Pennsylvania, or even neighboring Alabama, Georgia state law prohibits cities and counties from imposing local income taxes. The state has a single flat rate of 4.99% with no additional state-level wage taxes.
This makes Georgia's payroll system one of the simplest in the South. A worker in Atlanta pays the same state tax as one in Savannah, Augusta, or rural Georgia — the only differences are property taxes (county-specific) and sales taxes (state 4% + local up to 4%).
Georgia Retirement Income Exclusion (Best in the Southeast)
Georgia offers one of the most generous retirement income exclusions in the Southeast:
- Age 62-64 or disabled: Exclude up to $35,000 per person
- Age 65 or older: Exclude up to $65,000 per person ($130,000 for married couples)
- Social Security: Fully exempt at all ages
- Covers: Pensions, 401(k)/IRA withdrawals, annuities, dividends, interest, capital gains, rental income (up to combined limit)
For a married couple over 65 with $130,000 in combined retirement income, the GA state tax bill is $0. Compare to North Carolina ($5,187 at 3.99%) or California ($8,000+ progressive). This makes Georgia a top retirement destination for tax-conscious retirees.
2026 Federal Tax Brackets
| Taxable Income (Single) | Tax Rate |
|---|---|
| $0 – $11,925 | 10% |
| $11,926 – $48,475 | 12% |
| $48,476 – $103,350 | 22% |
| $103,351 – $197,300 | 24% |
| $197,301 – $250,525 | 32% |
| $250,526 – $626,350 | 35% |
| $626,351+ | 37% |
Georgia vs Other States: 2026 Comparison
| State | $100K Net Take-Home (Single) |
|---|---|
| Florida (no state tax) | ~$78,500 |
| Tennessee (no wage tax) | ~$78,500 |
| Ohio (2.75% flat) | ~$76,400 |
| Pennsylvania (3.07% flat) | ~$75,500 |
| North Carolina (3.99% flat) | ~$74,500 |
| Georgia (4.99% flat) | ~$73,500 |
| Illinois (4.95% flat) | ~$73,400 |
| South Carolina (6.4% top) | ~$72,400 |
| California (progressive) | ~$72,000 |
Frequently Asked Questions
For 2026, Georgia has a flat 4.99% state income tax rate, accelerated from 5.19% via HB 463 (signed April 2026). This was faster than the originally scheduled 5.09%. Georgia switched from a 6-bracket progressive system (top rate 5.75%) to a flat tax in 2024 and continues to reduce the rate. Future scheduled reductions of 0.125% annually starting in 2027 target a final rate of 3.99% by 2029-2034.
No. Georgia does not allow any cities or counties to impose local income taxes. There's a single flat state rate of 4.99% for 2026, and that's the only state-level income tax. This makes Georgia's payroll significantly simpler than Ohio (600+ municipal taxes) or Pennsylvania (1,000+ local Earned Income Taxes).
Georgia is very retirement-friendly. Social Security is fully exempt from state income tax at all ages. For taxpayers 65 and older, Georgia offers a $65,000 per-person retirement income exclusion (up to $130,000 for married couples). This covers pensions, 401(k) withdrawals, IRA distributions, and most annuity income. For ages 62-64 or disabled, the exclusion is $35,000.
Georgia's 2026 standard deduction increased significantly under HB 463: $15,000 for single filers (up from $12,000) and $30,000 for married filing jointly (up from $24,000). The deduction is scheduled to grow by $375/year for single filers (reaching $18,000) and $750/year for joint filers (reaching $36,000). HB 463 also created a $1,750 exemption for overtime pay and $1,750 for cash tips, available 2026-2028.
Sources & Methodology
- Georgia HB 463 (Economic Growth and Tax Relief Act of 2026) — Accelerated rate cut
- Georgia HB 1437 (2022) — Original flat tax legislation
- Georgia Department of Revenue — 2026 withholding tables
- O.C.G.A. § 48-7-20 — Individual income tax statute
- IRS Publication 15-T (2026) — Federal withholding
- Tax Foundation — 2026 state tax data
Calculator methodology reviewed by Benjamin Thomas, CPA, MST. Rates verified against Georgia Department of Revenue publications, April 2026.