Georgia’s 2026 legislative session: Major tax legislation moving forward

Passed one Chamber and Crossing Over: 

Income Tax

SB 476, HB 134 – Senate Income Tax Reform. This legislation is the result the Georgia Senate Special Committee on the Elimination of Georgia’s Income Tax. The Special Committee was formed by current Lt. Gov. Burt Jones who is a candidate for Governor this year. The special committee was chaired by Senator Blake Tillery, who is a candidate for Lt. Governor this year. The committee issued a report recommending that Georgia phase-in a full elimination of the personal income tax, with the revenue reductions to be paid for by tapping into the state’s surplus, changing certain bond funding, and eliminating or reducing many current tax incentives “that largely inure to corporate welfare in our state’s tax code.” 

These companion bills attempt to implement the findings of the Special Committee, setting up for future legislation that would fully eliminate the personal income tax by 2032. The bills begin that process by significantly increasing the standard deduction for personal income tax beginning in 2026. The standard deduction for single filers would increase from $12k to $50k and for married filers from $24k to $100k. The bills would reduce the personal income tax and corporate income tax rates from 5.19% to 4.99% beginning in 2026. 

The bills partially pay for the anticipated revenue loss by repealing many income tax credits and sales tax exemptions beginning in 2027. Income tax credits that would be repealed include, among others, the state income tax credits that banks and insurance companies receive for local taxes paid (O.C.G.A. §§ 33-8-4.1, 33-8-5, 33-8-8, 33-38-22, 48-6-93, 48-6-95, 48-7-29.7), the headquarters credit in O.C.G.A. § 48-7-40.18, the investment tax credit in Tier 3 and 4 counties (O.C.G.A. § 48-7-40.9), and the port credit enhancement to the investment and jobs tax credit (O.C.G.A. § 48-7-40.15). Sales tax exemptions that would be repealed beginning in 2027 include the high-technology computer equipment exemption in O.C.G.A. § 48-8-3(68), the data center exemption in O.C.G.A. § 48-8-3(68.1), and the exemption for natural or artificial gas used in the production of electricity that is subsequently sold in O.C.G.A. § 48-8-3(70). The bills would also reduce the amount of the credit for providing affordable housing found in O.C.G.A. § 33-1-18 (as applied against insurance premiums tax) and O.C.G.A. § 48-7-29.6 (as applied against income tax).

Lastly, the bills would sunset all credits against income tax beginning in 2032. While there is an expectation that a future General Assembly may renew certain tax credits prior to their sunset, there is no provision within these bills to do so.

SB 477, HB 463 – Senate Alternative Income Tax Reform. These companion bills are an alternative to the tax reductions within SB 476 and HB 134. The bills would provide for a more modest increase in the standard deduction for personal income tax beginning in 2027. The standard deduction for single filers would increase from $12,000 to $15,000 and for married filers from $24,000 to $32,000. The bills would reduce the personal income tax and corporate income tax rates from 5.19% to 4.99% beginning in 2026. The personal and corporate tax rates would then decouple and the personal income tax rate would be further reduced to 4.49% in 2027 and then to 3.99% in 2028 dependent on the state meeting certain economic thresholds. These bills do not address the repeal or sunset of any current tax incentives.

HB 880 – House Income Tax Reform. 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% so long as the state meets certain economic thresholds. This bill would allow for further rate reductions down to 3.99%. This bill would also provide for a phased-in increase of the personal exemption for dependents ($4k to $6k) and the standard deduction ($12k to $18k for single filers and $24k to $36k for married filing jointly) beginning in 2027 dependent on the state meeting certain economic thresholds. This bill would also increase the exclusion for retirees 65 or older from $65,000 to $70,000 per eligible taxpayer.

HB 1000 – One-Time Tax Credit for Individual Taxpayers. This bill would continue legislation passed in prior years, advocated by Governor Brian Kemp, and would provide for an additional income tax rebate of $250 for single filers and $500 for married filers as means to return money to taxpayers as the state once again had a revenue surplus in the prior fiscal year.

HB 1001 – Income Tax Rate Reduction. This bill would reduce the personal income tax and corporate income tax rates from 5.19% to 4.99% beginning in 2026.

HB 1199 – Annual IRC Conformity. This is Georgia’s annual income tax conformity bill, which would conform 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 H.R. 1, the One Big Beautiful Act (OBBA). This bill would generally conform with, or decouple from, the IRC as it has in prior years but for the following notable provisions below:

• Tips and Overtime – Would decouple from the exclusions for income from tips and overtime found within IRC §§ 224 and 225. Separate legislation, HB 1370 and HB 1416, were introduced which would provide partial exemptions for tips and overtime, but these bills failed to pass prior to Crossover Day. However, it is possible that these concepts could be added to other tax bills that have advanced.
• Auto Loan Interest – Would decouple from the deduction for interest on auto loans as found within IRC § 163(h)(4).
• Research and Development – Would continue to conform to IRC § 174 prior to the enactment of TCJA as related to research and experimental costs.
• Net CFC Tested Income (NCTI) – Would continue to decouple from taxation of foreign income as related to NCTI. Georgia previously decoupled from taxing GILTI.
• Section 179 Deduction – Would conform with the new increase in maximum deduction provided for within IRC § 179(b), but would continue to decouple with regard to real property as found in IRC § 179(e). 

HB 1085 – Keep Georgia Forested Act. This bill would allow forestry manufacturers to transfer (sell) Jobs Tax Credits and Investment Tax Credits for a 5-year period including any credits earned and claimed before January 1, 2026 but which are still unused. The bill would apply to taxable years beginning on or after January 1, 2026.

Sales Tax 

SB 410 – Restrict New Exemption Certificates for High-Technology Companies and Data Centers. This bill provides that no new certificates of exemption would be issued to high-technology companies or to high-technology data centers (or their customers) after the Governor’s signature of this legislation (or its becoming law without such approval). The sales tax exemption for high-technology companies found in O.C.G.A. § 48-8-3(68) was already scheduled to sunset after 2028. The sales tax exemption for high-technology data centers found in O.C.G.A. § 48-8-3(68.1) was already scheduled to sunset after 2031. This legislation would essentially allow currently existing data centers to claim the exemption through 2031, but would not allow new data centers to obtain an exemption certificate. 

The legislation would also add a new section to the Public Service Commission code which would say that each contract between an electric utility and a large load customer entered into after the Governor’s signature of this legislation shall include terms and conditions designed to protect residential and retail electricity customers from costs associated with serving large load customers.

HB 1112 – Cash Transaction Rounding. This bill provides guidance for businesses on rounding transactions to the nearest 5 cents. 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. However, businesses can accept exact payment in legal tender for the total amount due computed prior to any rounding. No state or local tax would apply to losses or gains resulting from rounding pursuant to this bill.

Property Taxes

HB 1116 – Homeownership Opportunity and Market Equalization Act of 2026. This bill is the current result of the Speaker of the House’s goal to provide significant property tax relief for homeowners. The version of the bill that ultimately crossed over does not provide for full elimination of tax on homestead property as had been previously proposed. Instead, it would provide for limitations on local government budgets and a “straw poll” ballot question to voters in the upcoming November 2026 general election as to whether Georgia should fully exempt homestead properties from property tax. The bill would restrict local government’s from increasing the revenue of their annual operating budgets by more than the greater of 3% or the annual inflation rate, unless approved by a local referendum election or by the General Assembly through a local authorizing Act.

The bill would also provide for other tax measures as follows:

• Generally caps local sales taxes at the current maximum of 5% (with limited exceptions) and converts most special local option sales taxes into general sales taxes subject to the 5% cap.
• Requires that new local sales taxes be used first for the purpose of providing full property tax relief for homestead properties, with any excess then used for providing property tax relief for non-homestead properties, and only then for providing other government services.
• Requires localities to notify each taxpayer by mail of any rollback rate increases (in addition to the public notice currently required) and requires a refund to taxpayers for noncompliance.
• Requires municipal and school officials responsible for collecting ad valorem taxes to complete revisions and assessments of returns by July 15 each year.
• Prohibits retroactive additional assessments based on improper or mistakenly applied homestead exemptions unless due to misrepresentation or fraud by the taxpayer.
• Adds that, beginning in 2029, all sales tax revenue collected from the sales or lease of computer equipment to a high-technology company (that previously would have been entitled to a sales tax exemption that expires after 2028) shall be used for purposes of homestead property tax relief.

HB 275 – Standardizing Property Tax Notices. This bill would standardize property tax notices by requiring certain language and information to be included in notices. Notices would now be required to list each exemption, credit, or preferential assessment allowed for the property, as well as the estimated tax savings from such treatment. 

HB 1261 – Freeport Exemption for Utilities. This bill would amend O.C.G.A § 48-5-48.2 governing the level-1 freeport exemption so that localities can adopt, via ordinance, an exemption for spare electric utility equipment, including capital equipment and supplies, that are held in inventory by an electric utility for use in its business but not yet incorporated into its operating facilities.

SB 382 – Mandatory Statewide Homestead Exemption. This bill would make the state-wide base year homestead exemption mandatory for all political subdivisions. Essentially, it eliminates an opt-in provision in HB 581 (passed in 2024) and requires localities to cap the increase in a home’s assessed value at the rate of inflation.

Other

HB 1247 – Georgia Bureaucratic Deference Elimination Act. This bill would end 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.”

HB 1063 – Data Center Energy Use. This bill provides that contracts between electric utilities and data centers shall include terms and conditions “designed to protest residential and retail electricity customers with costs associated with data center construction and operation.” 

Significant Bills that Failed to Pass Either Chamber

SB 502 and SB 520 – The Affordability Act of 2016 and Revision of State Income Tax. Senate Democrats put forth these bills to address affordability in contrast to SB 476 and SB 477. SB 502 would exempt various consumer items from sales and use tax, including over-the-counter medicine, first aid supplies, school supplies, gun safes and lock boxes, home energy efficiency products, and workforce training supplies. It would also exempt baby care products, such as diapers, baby formula, car seats, and cribs from sales and use tax. SB 520 would revise the state’s income tax structure by implementing a tiered progressive rate for personal income tax and increasing the corporate tax rate from 5.19% to 6.00%. The legislation would also raise the child tax credit and establish a new refundable earned income tax credit. The bill would also release the tax credit for contributions to student scholarship organizations and increase the excise tax on various tobacco and vape products.

SB 576 – Property Tax Increases for Housing Providers Owning Single Family Homes. Several bills were introduced this session addressing corporate ownership of large quantities of single-family homes for lease. SB 576 is one example which would impose different ad valorem tax rates for tangible real property owned by community housing providers and other housing providers. Property of a housing provider would be taxed at 100% of its value, but community housing providers would be taxed at 40%. A housing provider would be classified as community housing provider if it (1) is a nonprofit corporation or individual, or (2) is a pass-through entity that owns no more than 500 properties in the state. A Subchapter C corporation could not be a community housing provider. SB 576 would also require non-community housing providers to provide tax assessor the necessary data to use an income approach to determine fair market value of property.

SR 668 – Constitutional Change for Separate Property Tax Classifications. This proposed resolution would allow voters to determine whether to change the state constitution to allow localities to establish as a separate class of property for ad valorem tax purposes any tangible real property used primarily by data centers to “reduce the burden of ad valorem taxation on other tangible property.” The original version of this resolution also included property used in manufacturing and warehousing. This bill failed to obtain the two-thirds approval needed to pass a resolution proposing to amend the state constitution.

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