Relief on Tap for Georgia Taxpayers

In Summary

• The state income tax rate is immediately reduced from 5.75% to 5.19%. This is part of a plan that includes an automatic annual reduction of 0.10% until the rate reaches 4.9%, resulting in an estimated $880 million in taxpayer savings next year.
• A refund is authorized due to a budget surplus, with a maximum of $500 per household for eligible full and nonresident income tax filers.
• To qualify for the surplus refund, an individual must have been a resident (or nonresident filer) in both 2023 and 2024 and filed an income tax return for both years. The maximum refund amounts are $250 for single filers/married filing separately, $375 for head of household, and $500 for married filing jointly.
• The Department of Revenue will begin issuing the surplus refunds in late May and conclude by early July. Payments will be made according to the refund instructions on the taxpayer’s return (direct deposit or paper check), and a tool will be made available to track the refund status.

Earlier this month Georgia Governor Brian Kemp signed two important parcels of legislation into law. The enactment of House Bill (HB) 111 and 112 provides both tax relief and a surplus refund to full and nonresident income tax filers. The first calls for a continued reduction in the state income tax rate from then original 5.75% to 5.19% effective immediately. The second permits surplus tax refunds to be paid to eligible individuals. The maximum refund is $500 per household with smaller amounts determined by filing status. These changes follow prior years when the state issued other such refunds due to a budget surplus. In any case, this is certainly welcome news for Atlanta area taxpayers. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

State Income Tax Cut

House Bill (HB) 111 calls for the largest income tax reduction in the state’s history. As mentioned above the rate will be reduced from 5.75% to 5.19% and also includes an annual .10% reduction until the rate reaches 4.9%.  This reduction continues to build upon changes in prior years that have been designed to reduce the state income tax rate. Many will see a reduction in payroll withholding in mid-summer. The Georgia Department of Revenue estimates the cut will save taxpayers $880M on next year’s tax return.  

Surplus Tax Refunds

HB 112 calls for a one-time surplus tax refund to Georgia taxpayers with a maximum of $500 per household. To be eligible an individual must have been a full-time state resident in both 2023 and 2024, filed an income tax return for both years and be entitled to a refund. Nonresidents who file state returns for both years will also be eligible to receive a proportional refund. The amount will be equal to the maximum amounts based on filing status multiplied by state taxable income.

The Department of Revenue will start issuing the refunds in late May and concluding in early July. Payments will be made in accordance with refund instructions provided on the tax return. This means some will receive it via direct deposit and others a paper check. The amount of the refund depends on filing status. Single filers and married filing separately may receive a maximum refund of $250. Head of household filers a maximum of $375 and married individuals filing jointly a maximum refund of $500.

New this year there will be a special tool which will allow taxpayers to track the status of the surplus refund. Unfortunately, it has not yet been made available. However, there is a series of frequently asked questions (FAQs) available which provide additional information.

Contact Us

The recently signed legislation provides an important tax reduction and surplus refund. While not everyone is eligible for the refund, the tax rate reduction applies across the board. 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.