Policy wonks on both sides of an upcoming debate in the General Assembly over whether to eliminate Georgia’s income tax are advocating a cautious approach.
“That’s a very lofty goal,” said Danny Kanso, senior fiscal analyst with the progressive-leaning Georgia Budget & Policy Institute. “The income tax represents 56% of general-fund revenues. Nineteen billion dollars would leave a massive hole.”
“You can’t just cut spending,” added Kyle Wingfield, president and CEO of the Georgia Public Policy Foundation, a think tank that advocates free-market approaches to public-policy issues. “You have to be thoughtful about how to make the math work.”
Lt. Gov. Burt Jones, who presides over the Georgia Senate, has formed a legislative study committee to consider whether to eliminate the state income tax. Jones, a Republican, has made abolishing the tax a key platform plank as he seeks the GOP nomination for governor next year.
Republican governors and the legislature’s GOP majorities have moved in that direction in recent years, reducing the income tax rate from 6% to 5.75% in 2022, then ratcheting it down further to 5.49%, 5.39% and - this year - to 5.19%.
But Republicans have stopped short of attempting to repeal the tax altogether. State Sen. Blake Tillery, R-Vidalia, who will chair the study committee, pledged to rectify that during a news conference on July 24, vowing to introduce legislation during the 2026 General Assembly session to get rid of the tax.
Tillery said nine states do not impose an income tax, including the neighboring states of Tennessee and Florida, as well as the swing states of Nevada and New Hampshire, and the deep-blue state of Washington.
“This is about competitiveness, economic freedom, and letting hardworking Georgians keep their money in their pockets,” he said.
Tillery promised to chart a “realistic and responsible path” toward ending the income tax, acknowledging the difficult task ahead.
Kanso said the incremental reductions in the income tax rate lawmakers have approved thus far were accomplished by cutting spending rather than increasing other taxes. He said that bringing the income tax rate close to zero would require more sources of revenue.
“They haven’t replaced income taxes with another tax,” he said.
The next-largest source of state revenue after income taxes, the sales tax, would be a logical place to look. Way back in 2010, a special committee of lawmakers and business leaders formed to overhaul Georgia’s tax system recommended that the state move more toward taxing consumption and away from relying as much on taxing income.
But the group’s report went nowhere amid opposition to politically unpopular proposals like taxing groceries or services.
“What you’re really saying is, ‘We’re going to start paying taxes on things we haven’t paid taxes on before,’ “ Kanso said. “It becomes a much more difficult position to sell.”
Wingfield cited a study conducted by the Georgia Public Policy Foundation before the pandemic that concluded the state income tax rate could be lowered to 3% by taxing some services or raising the state sales tax rate from the current 4%.
He said one politically palatable way to begin taxing services would be to limit the tax to goods a business provides but not the service components of its operation, for example, an oil-change company that taxes only the oil but not the labor.