May 5, 2024
ATLANTA – A $1 billion election-year tax cut the Republican-controlled General Assembly passed last year took effect on New Year’s Day.
For now, the phased-in tax cut sets the state income tax rate for 2024 at a flat 5.49%, down from the current 5.75%. The tax rate will continue to decline annually, arriving at 4.99% in 2029.
However, Gov. Brian Kemp announced earlier this month that he plans to ask lawmakers to accelerate the reductions by one year. If legislators agree, the tax rate for 2024 would be set at 5.39%.
Supporters say across-the-board tax cuts are more effective at creating jobs than the assortment of tax credits and exemptions for specific industries the General Assembly has passed over the years.
“When you do it broad-based, you’re not giving any favoritism,” said Kyle Wingfield, president and CEO of the Georgia Public Policy Foundation, a think tank that advocates free-market approaches to public-policy issues. “It takes the politics out of the policy.”
Wingfield said targeted tax relief also fails to benefit new industries that public policymakers can’t foresee.
“When you do more of a targeted approach, you’re giving tax relief to a company or industry you already know about,” he said. “With broad-based tax relief, you’re encouraging people out there who are creating the next company that will turn into a large employer.”
Now, Kemp is calling on the General Assembly to speed up the tax cut by moving the 5.39% state income tax rate due to take effect in 2025 to 2024.
Georgia can easily afford to accelerate the tax relief. The state has built up a surplus of $16 billion during the last few years, including $11 billion in undesignated funds.
“Thanks to our conservative budgeting and strong state economy built on business-friendly policies, we are well-positioned to move the timeline up and put more money where it belongs – back into Georgians’ pockets,” Kemp said in announcing the proposal earlier this month.
The 2024 session of the General Assembly will begin Jan. 8.
