Breaking News
More () »

Georgia moving to flat tax rate | What this means for your money

Jared Walczak of the Tax Foundation says Georgia is one of sixteen states to pass tax reform in recent months

ATLANTA — Lower taxes are coming to Georgia, and one expert said once the state’s income tax rate begins to drop, it will be difficult for Georgia to raise them again.

Gov. Brian Kemp has signed legislation that puts the wheels in motion to move Georgia to a "flat" state income tax. The bill calls for the flat rate to drop beginning in 2024 and continue to drop to 4.99% in 2029.

Georgia is one of three states to approve the move to a flat state income tax rate this year. Iowa and Mississippi are the others. Nine other states have a flat income tax where everyone pays the same rate no matter their income.

Jared Walczak of the Tax Foundation in Washington D.C. said Georgia is one of 16 states that have implemented some kind of tax reform over the past year-and-a-half.

“Everyone will see a slightly smaller tax bill,” Walczak explained. “We're not talking earth shattering reductions, but there will be lower tax bills.”

Georgia lawmakers approved the flat tax during the recent legislative session. Critics said it benefits higher income families while depriving the state of funds to help the needy.

Walczak says businesses are often attracted to states with a flat income tax rate in part because it’s easier for them to project revenues.

“We're in an era of increased mobility,” he said. “People, individuals and businesses can increasingly move and work wherever they want to, and that is driving a focus on tax competition.”

Although lower taxes won’t come for a while, Walczak said once the rates start dropping, it’s unlikely that Georgia will reverse course.

“The political challenge of raising a tax on everyone is a whole lot harder than saying, ‘well, you know, here's 10% of taxpayers, let's raise taxes on them.’”

There are provisions that could temporarily pause the lowering of the tax rate should the state reach a year where it struggles financially.

Oklahoma is also considering a move to a flat tax.



Before You Leave, Check This Out