Georgia collects more in income tax despite rate cuts

David Wickert, The Atlanta Journal-Constitution on Oct 7, 2025

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ATLANTA — Georgia income tax revenue continues to rise despite years of rate cuts approved by the General Assembly.

A report released Tuesday by Gov. Brian Kemp’s office shows individual income tax collections rose 1.9% to $3.9 billion in the first three months of fiscal year 2026, which began July 1.

If revenue continues to rise, it may boost plans for further cuts to the state’s income tax rates. Supporters say reducing the rate encourages people and businesses to move to the state, increasing revenue.

Some Republicans — including Lt. Gov. Burt Jones, who is running for governor next year — want to go further. They’re studying ways to eliminate the income tax altogether, a move they say is needed to keep Georgia competitive with other states.

Opponents say cutting income taxes amounts to a tax cut for high earners, while middle- and low-income Georgians see little benefit because it would require Georgia to raise other taxes — likely sales taxes on a variety of services that are currently exempt. Critics say that would shift the tax burden to the poor, who pay a higher share of their income on services from health care to haircuts.

The individual income tax is Georgia’s largest source of revenue. It’s expected to generate $15.7 billion this year or about 42% of state revenue. The corporate income tax generates another $3.3 billion, or 9% of revenue.

Kemp and the General Assembly have been cutting the income tax rate for years, from 5.75% in 2022 to 5.19% this year. It’s scheduled to drop to 4.99% in 2027.

The cuts have been made possible by years of big budget surpluses fueled by a big boost in federal spending, a postpandemic economic boom and high inflation, which boosted sales tax revenue.

However, the latest revenue report suggests state revenue has begun to plateau, thanks in part to the tax cuts. Corporate income tax revenue fell about 3.8% in the first three months of the fiscal year, the report shows. Net sales taxes — the state’s second-largest source of income — rose 1%.

Overall general fund revenue rose 0.8%, according to the report.