Many Georgia residents may welcome a special payment this year. After passing the state House unanimously last week, a bill proposing one-time payouts for eligible Georgians will be sent to the Senate for approval. If the Senate approves the bill and Gov. Kemp signs it, Georgia residents could expect $1 billion in disbursements.
But more than just tax refunds are on the line.
Another bill going to the Senate for approval addresses state income tax cuts. As Kiplinger reported, Georgia moved to a new lower income tax rate last year and will continue to cut income taxes if certain economic factors are met. However, this new bill would reduce the rate faster, causing some concern over future state funding.
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Here’s what you need to know about the Georgia surplus tax refund and income tax cuts in 2025.
Georgia tax refund surplus
As Kiplinger has reported, Georgia has sent special tax payments to residents twice before. During the last payout, taxpayers had to meet the following eligibility requirements to qualify for a surplus tax refund:
- Full- or part-year Georgia resident (or nonresident).
- Filing the current year’s and prior year’s state income tax returns by the tax season deadline (or by the October extension due date, if applicable).
- Have a tax liability in a prior tax year (typically the year before last).
2025 information is unavailable as the refund surplus is pending approval in the state Senate, though the Georgia tax surplus refund amounts are typically as follows:
- $250 for single and married filing separate filers.
- $375 for heads of household.
- $500 for married filing joint filers.
House Bill 112, which proposes these payments, was passed into the Senate without exception. But another bill which left the House didn’t have as much fanfare: House Bill 111 to cut the 2025 income tax rate.
2025 Georgia income tax rate cut
Last year, Georgia switched from a tiered income tax system, which peaked at 5.75%, to a flat income tax rate of 5.49%. In the current filing season, the rate dropped to 5.39%.
But Georgia’s new income tax rate is expected to go even lower in future years.
- The income tax rate will be reduced to 5.29% in 2025 (2026 filing season).
- Each subsequent year, the rate will decrease by .10%.
- The final flat income tax rate of 4.99% is projected to be reached in 2028.
For these rate drops to occur, the state budget must meet certain economic targets, such as increasing the annual revenue estimate by at least 3%. While some claim the 3% rule was not met to warrant a 5.29% reduction, a new bill proposes slashing 2025’s income tax rate further to 5.19% — one year ahead of schedule.
Georgia state income tax bill
HB111 passed the House by a vote of 110-60; however, not everyone supports accelerating income tax cuts in Georgia.
“[This] is not a responsible approach to tax reform,” minority whip Rep. Sam Park (D-Lawrenceville) told a local news outlet. “It is a risky, top-heavy tax giveaway that benefits a few at the expense of the many. It is bad economics, bad policy, and bad for Georgia’s long term financial health.”
The Georgia Budget and Policy Institute reports that an income tax cut from 5.39% to 5.19% would provide higher savings to wealthier individuals and lower savings to lower-income residents, with:
- $313 million going to Georgians with incomes $75,000 and up.
- $144 million going to Georgia residents with incomes of $45,000 and below.
Total taxpayer savings for all income groups are expected to be $870 million. According to the state Governor’s Office of Planning and Budget, the Peach State had a budget surplus of about $11 billion last fall.
Both bills — the income tax rate cut and surplus refunds — passed the House vote on Crossover Day, the last day a bill can move from one chamber for consideration to another. The proposals will now move on to the state Senate for approval. Stay tuned.
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