Georgia Considers New Tax Breaks for 2026

Georgia’s 2026 legislative session began on January 12 and runs for 40 legislative days. Lawmakers are deciding how to use about $14 billion in reserves and surplus funds. Proposals on the table include another round of taxpayer rebates, income tax cuts, new limits on property tax increases, and changes to sales tax exemptions for data centers. The outcome will affect what residents and businesses pay in taxes and what resources the state has to fund services. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.

Background

Republicans control both the House and the Senate, and all 236 seats in the Georgia General Assembly are on the ballot this year. Georgia’s economy is still relatively strong, with low unemployment, but growth has slowed compared to the last few years. In that environment, lawmakers are promoting tax relief to address cost concerns, and budget analysts are watching whether new cuts and rebates would still be affordable if the economy weakens. It’s possible that negotiations will continue into the final days of the session. 

Key Tax and Budget Proposals

2026 Rebate Proposal — Governor Brian Kemp has proposed another round of surplus-funded rebates, estimated at about $1 billion. The structure would mirror prior years, with up to $500 for married couples filing jointly and $250 for single filers.

The rebate is built into the amended budget rather than a stand-alone bill. That means the size and details can change as House and Senate leaders negotiate the overall spending plan and decide how much of the surplus to send back to taxpayers.

Income Tax Cuts — The Senate has passed two major income tax bills and sent them to the House. Both would lower income taxes, but they work in different ways:

• SB 476 would make the first $50,000 income for single filers and $100,000 for married couples filing jointly effectively tax free. Supporters say this change could wipe out state income tax bills for roughly two-thirds of Georgia filers, which would mean relief for millions of taxpayers, especially in lower- and middle-income brackets.
• SB 477 would lower Georgia’s flat income tax rate in steps over the next few years, with a goal of bringing the rate to just under 4% by 2028 if the state meets certain revenue targets.

For now, House lawmakers are weighing which approach to move forward, or whether to combine parts of each bill. Any version that passes will mean long-term changes for Georgia taxpayers. 

Property Tax Assessment Cap — On the property tax side, lawmakers are revisiting a homestead exemption Georgia voters approved in November 2024 (HB 581). That measure limits how quickly property taxes can rise on a primary residence by tying annual increases in taxable value to inflation.

Under current law, cities, counties, and school systems can opt out of the cap, and many have. SB 382 would remove that option and make the cap apply statewide. For homeowners, that would mean more predictable property tax bills when values rise.

Local governments and school systems have raised concerns about how a mandatory cap could affect their ability to fund services. SB 382 has already passed the Senate and now awaits action in the House.

Data Center Tax Breaks — Data center construction in Georgia has surged in recent years, helped by generous sales tax breaks. Lawmakers are now weighing whether to scale back those incentives. This includes two bills (SB 408 and HB 559), which would sunset the current sales tax exemption for data center equipment at the end of 2026. It also includes SB 410, which would keep the exemption for existing projects but prevent new data centers from qualifying for it. 

Several other bills are also on the table, including one that would pause all new data center construction until March 1, 2027. Supporters say the state needs time to study how data centers affect power demand, utility bills, and local budgets. Industry groups say scaling back tax breaks and pausing projects could push future investments to other states.

What to Watch

Two dates shape the rest of the session.

• March 6, 2026 — By early March, most bills must pass the chamber where they originated to remain active this year. Measures that do not pass typically stall until the next session.
• April 2, 2026 — Lawmakers are scheduled to adjourn in early April, and they often negotiate until the final days. Bill language can change with little notice as leaders reach last-minute compromises.

Contact Us

For now, most tax proposals in Georgia are still in motion. The impact won’t be clear until later in 2026; the governor still must sign any final budget and tax bills. Individuals and business owners will want to track which measures pass and update cash flow and tax strategies once any tax changes are finalized. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.