Georgia Legislature concludes 2026 session: Tax highlights from Sine Die

The Georgia General Assembly passed several significant tax bills during the 2026 legislative session, although the extent of income and property tax changes that were ultimately adopted was short of the groundbreaking tax reform originally proposed. The General Assembly spent significant time debating and amending various bills related to substantially decreasing the personal income tax and reducing or eliminating property taxes for homestead property. Ultimately, in addition to the other provisions set forth below, the General Assembly passed legislation that would accelerate the multiyear planned reduction of the state income tax rate and would cap the growth of assessments of homestead property and allow localities to adopt a penny sales tax to provide additional homestead property tax relief (LHOST). Furthermore, while much attention was given during the session to the taxation of data centers and related high-technology companies and their use of energy, no such legislation received final passage.

The 2026 Georgia legislative session ended on April 3, 2026. Both chambers of the General Assembly passed the below bills that now get transmitted to the governor (unless otherwise noted where the governor has already signed). Within 40 days (May 13), the governor can sign or veto the legislation. If the governor does not take any action, the below bills that passed both chambers become law at the end of the 40-day period.

Income Tax 

HB 463 – Georgia Economic Growth and Tax Relief Act of 2026. Current law provides for a phased-in reduction of the state personal and corporate income tax rates (currently 5.19%) by 0.10% annually down to 4.99%, which would have been reached by 2027 so long as the state meets certain economic thresholds. HB 463 accelerates this by reducing the personal and corporate income tax rates to 4.99% in 2026 and further rate reductions by 0.125% annually, down to 3.99%, so long as the state meets certain economic thresholds. In addition to rate reductions, the bill includes the following notable provisions: 

• Dependent Exemption – increases the personal exemption for dependents from $4k to $5k beginning in 2026 and provides for phased-in increases of $125 per year until the exemption is $6k, so long as the state meets certain economic thresholds. 
• Standard Deductions – increases the standard deduction from $12k to $15k in 2026 for single filers, with increases of $375 per year until the deduction is $18k. For joint filers, the standard deduction would increase from $24k to $30k in 2026, with an additional $750 per year until the exemption is $36k. These increases to the standard deduction are also contingent on the state meeting certain economic thresholds.
• Exclusion for Retirees – increases the exclusion for retirees 65 or older from $65,000 to $70,000 per eligible taxpayer. 
• Tips and Overtime – provides a lower exemption amount for tips and overtime than is provided by the exclusions of IRC §§ 224 and 225 enacted in H.R. 1, the One Big Beautiful Bill Act (OB3). HB 463 provides for an exemption of up to $1,750 for tips and $1,750 overtime for 2026 through 2028. For federal income tax purposes beginning in 2025, OB3 provides a larger exclusion of $25,000 for tips in a taxable year and $12,500 in qualified overtime payments per return ($25,000 for a joint return) in a tax year. See IRS Notice 2025-69 for detailed Guidance for Individual Taxpayers Who Receive Qualified Tips or Qualified Overtime Compensation. As discussed below, Georgia does not conform to these provisions of OB3.
• Eliminates Credits – eliminates the following income tax credits as of January 1, 2026:

• Telework credits under O.C.G.A. § 48-7-29.11;
• Tax credits for Personal Protective Equipment manufacturers under O.C.G.A. § 48-7-40.1A;
• Tax credits for manufacturers of medical equipment and other medical supplies under O.C.G.A. § 48-7-1B;
• Tax credits for port traffic and employers with port traffic increases under O.C.G.A. §§ 48-7-40.15 and 15A;
• Tax credits for alternative fuel, low-emission, and zero-emission vehicles and electric vehicle chargers under O.C.G.A. § 48-7-40.16; and
• Tax credits for businesses headquartered in state and full-time jobs under O.C.G.A. § 48-7-40.18, tax credits for manufacturers of cigarettes under O.C.G.A. § 48-7-40.20.

• Repeals the following sales tax exemptions (presumably as of January 1, 2026):

• Rentals of videotape or motion picture film to any person who charges an admission fee to view such film or videotape under O.C.G.A. § 48-8-3(24);
• Sales of printed advertising inserts or advertising supplements distributed in or as part of any newspaper for resale under O.C.G.A. § 48-8-3(61);
• Sales of machinery, equipment, or materials incorporated into and used in the construction or operation of a clean room under O.C.G.A. § 48-8-3(69);
• Sales of mechanically propelled watercraft by a dealer to an individual who resides outside of Georgia under O.C.G.A. § 48-8-3(33.1); and
• Any new exemption certificates for sales of machinery and equipment used primarily for reducing or eliminating air or water pollution pursuant to O.C.G.A. § 48-8-3(36) after the effective date of the legislation.

HB 1000 – One-Time Tax Credit for Individual Taxpayers. This bill continues legislation passed in prior years and advocated by Governor Kemp, providing for another income tax rebate of $250 for single filers, $500 for married filers, and $375 for heads of households as a means to return money to taxpayers as the state once again had a revenue surplus in the prior fiscal year. This bill was signed by Governor Kemp on March 20, 2026, and the Georgia Department of Revenue expects to begin issuing these rebates for eligible taxpayers who filed state income tax returns for the 2024 and 2025 taxable years within the next 6 weeks (approximately). 

HB 1199 – Annual IRC Conformity. This is Georgia’s annual income tax conformity bill, which conforms Georgia’s revenue code to the federal Internal Revenue Code as of January 1, 2026 with certain exceptions. The predominant focus of the conformity legislation this year deals with conformity with OB3. Governor Kemp signed the bill on March 20, 2026, and thus it should be effective for timely filed Georgia returns. Generally, this bill conforms or decouples from the IRC as in prior years except for the following notable provisions:

• Auto Loan Interest – decouples from the deduction for interest on auto loans as found in IRC § 163(h)(4).
• Research and Development – continues to conform to IRC § 174 prior to the enactment of TCJA as related to research and experimental costs.
• Net CFC Tested Income (NCTI) – continues to decouple from taxation of foreign income as related to NCTI. Georgia previously decoupled from taxing GILTI.
• Section 179 Deduction – conforms with the new increase in maximum deduction provided for within IRC § 179(b) but continues to decouple with regard to real property as found in IRC § 179(e). 
• Tips and Overtime – decouples from the exclusions for income from tips and overtime as found within IRC § 224 and 225. But see HB 463 (discussed above) which provides a separate partial exemption for tips and overtime.

The conformity bill also made the following additional tax changes:

• Limit on Low-Income Housing Credit – limits the amount of the aggregate annual amount of tax credits allowed pursuant to O.C.G.A § 48-7-29.6 to $100 million for taxable years 2006 through 2008.
• 60-Day Gas Tax Suspension – suspends the collection of the excise tax imposed at the rate of 26¢ per gallon on distributors who sell or use motor fuel, other than diesel fuel, and 29¢ per gallon on distributors who sell diesel fuel within Georgia provided for in O.C.G.A. § 48-9-3(a)(1) for 60 days beginning on the effective date of the Act. 

HB 134 – Keep Georgia Forested Act. This bill expands income tax credits for forestry manufacturing facilities, introduces credits for job creation, and allows unused credits to be transferred. Forestry manufacturing is defined by NAICS codes, with tiered employment and investment credits available for facilities located in designated counties. During certain periods, forestry manufacturers can transfer or sell credits, subject to reporting and compliance requirements. The bill takes effect on July 1, 2026, and applies to taxable years beginning January 1, 2026, and ending December 31, 2031.

Sales Tax

HB 1112 – Cash Transaction Rounding. This bill provides guidance for businesses on using symmetrical rounding on transactions to the nearest nickel. Under the bill, businesses would round down any transaction ending in 1, 2, 6 or 7 cents, and round up for transactions ending in 3, 4, 8 or 9 cents. Rounding to the nearest five cents may apply to the amount of the transaction or to the amount of change tendered to the purchaser. Pennies would remain legal tender in Georgia, and this bill provides that retailers may not round if a customer can provide exact change (including pennies). No state or local tax would apply to losses or gains resulting from this rounding. 

Property Tax

SB 33 – Homeownership Opportunity and Market Equalization Act of 2026. This bill (originally related to hemp farming but stripped and replaced) expands homestead exemptions across the state in two ways. First, it makes the existing homestead exemption provided by O.C.G.A. § 48-5-44.2 more truly statewide than it has been. Second, it allows a new and additional homestead exemption to be funded by a 1% local option sales tax.

Beginning in 2025, O.C.G.A. § 48-5-44.2 has allowed a statewide homestead exemption that in effect caps the value of a homestead (generally a primary residence) for property tax purposes at the value the homestead had in 2024 (or, if later, the year prior to the first year the property was eligible for this homestead exemption) plus inflation and the value of any substantial property improvements. However, the legislation allowed local governments to opt out of this homestead exemption, and many localities did so. SB 33 repeals that optionality so that this homestead exemption capping the values of homesteads (until sale) will truly be statewide as of the 2027 tax year. 

SB 33 also allows counties, if approved by local referendum, to impose a new and additional 1% sales tax, called the Local Homestead Option Sales Tax (LHOST), to fund a new and additional homestead property tax exemption. The amount of this new homestead exemption would be determined annually based upon the net proceeds of the LHOST collected in the jurisdiction. All of the LHOST collected must be used to fund the new homestead exemption, and the new homestead exemption is in addition to and not in lieu of any other homestead exemption applicable to the property (including the 48-5-44.2 homestead exemption discussed above). In the event that the proceeds from the LHOST exceed the amount necessary to exempt all homestead property from ad valorem taxation imposed by all local governments, the excess proceeds are to be applied to reduce millage rates in effect on all property within the county for such year.

Various versions of this legislation contained caps on local budget increases over prior years but the budget limitations were ultimately removed before final passage.

SB 566 – Homestead Exemption and Tax Bill Requirements. This bill modifies the information required on property tax bills and assessment notices provided to taxpayers. The property tax bills and notices of assessment are now required to show the amount of tax reductions from exemptions, credits, and preferential assessments applied to the taxpayer’s property. This bill also makes some technical corrections to the statewide homestead exemption passed in 2024 and extends the deadline for filing homestead applications to the time for filing an appeal to the year’s assessment. It also now imposes an affirmative duty on any taxpayer previously granted the exemption in any year to report to the assessor if they become ineligible for the exemption in a later year and includes a penalty for failing to report their ineligibility. This bill also creates a state-wide homestead exemption reporting system, by mandating annual submissions of homestead exemption information from local tax officials to a database to be maintained by the Department of Revenue and requires local tax officials to consult the listing on an annual basis. 

Other

HB 1247 – Georgia Bureaucratic Deference Elimination Act. This bill ends judicial deference to the interpretations of all administrative agencies in the state. This bill comes on the heels of Loper Bright which ended the Chevron doctrine at the federal level. Specifically, HB 1247 states that when interpreting Georgia’s state constitution, statutes, regulations, or other sub-regulatory documents, “a court, or an officer hearing an administrative action, shall not defer to a state agency’s determination or interpretation of such authorities, whether such determination or interpretation is written or unwritten.” Further, this bill amends several portions of O.C.G.A. title 48 relating to revenue and taxation in accordance with this ending of judicial deference to regulations in state and local tax matters, amending legislation originally adopted in 2021. The law change would become effective immediately upon the governor’s signature or upon its becoming law without such approval (upon 40 days).

HB 141 – Occupation Tax; Allow Businesses to Provide CPA Affidavits in Lieu of Tax Returns. Current law allows local governments to request financial information necessary to allocate the gross receipts of businesses and practitioners among multiple jurisdictions. HB 141 allows taxpayers to submit a CPA's affidavit, instead of tax returns or other financial documents, for this purpose specifically and to facilitate the local government’s determination of the amount of occupation tax to be levied.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.