26 HB 463/AP House Bill 463 (AS PASSED HOUSE AND SENATE) By: Representatives Blackmon of the 146th, Burns of the 159th, Hatchett of the 155th, Gilliard of the 162nd, Stephens of the 164th, and others

A BILL TO BE ENTITLED AN ACT To amend Title 33 and Title 48 of the Official Code of Georgia Annotated, relating to 1 insurance and revenue and taxation, respectively, so as to reduce the personal income tax 2 rate; to revise provisions relative to annual reductions of the income tax; to reduce the rates 3 of taxation on corporate and partnership income; to increase the amounts of the standard and 4 dependent deductions from state taxable income for individuals; to provide for an increase 5 in the amount of retirement income that may be excluded from state taxable income for 6 individuals 65 or older; to exclude a portion of overtime compensation and cash tips from 7 taxation; to provide for reporting by employers; to provide for rules and regulations; to 8 provide for automatic repeal; to provide for prospective annual increases in the amounts of 9 such deductions; to repeal income tax credits for manufacturers of medical equipment and 10 supplies, pharmaceuticals, medicine, and personal protective equipment, alternative fuel, 11 low-emission, and zero-emission vehicles and electric vehicle chargers, businesses 12 headquartered in this state, businesses engaged in manufacturing cigarettes for exportation, 13 business enterprises that purchase or lease a motor vehicle to provide transportation for 14 employees, base year port traffic increases, and teleworking expenses; to repeal the state 15 sales tax and use exemptions for the rental of videotape or motion picture film, printed 16 advertising inserts or supplements, machinery or equipment used to reduce air or water 17 pollution, high-technology company computer equipment, data center equipment, sales of 18 machinery, equipment, and materials used in the construction or operation of certain 19 H. B. 463 - 1 -

26 HB 463/AP buildings; to allow for the continued use of a certificate of exemption issued prior to the date 20 of repeal relating to the sale of machinery and equipment used for the primary purpose of 21 reducing or eliminating air or water pollution; to amend Part 1 of Article 4 of Chapter 12 of 22 Title 45 of the Official Code of Georgia Annotated, relating to management of budgetary and 23 financial affairs, so as to change provisions relative to surplus funds of the Revenue Shortfall 24 Reserve; to provide for conforming changes; to provide for related matters; to provide for an 25 effective date and applicability; to provide a short title; to repeal conflicting laws; and for 26 other purposes. 27 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA: 28 PART I 29 SECTION 1-1. 30 This Act shall be known and may be cited as the "Georgia Economic Growth and Tax Relief 31 Act of 2026." 32 PART II 33 SECTION 2-1. 34 Title 48 of the Official Code of Georgia Annotated, relating to revenue and taxation, is 35 amended in Code Section 48-7-20, relating to individual tax rates, credit for withholding and 36 other payments, and applicability to estates and trusts, by revising subsection (a.1) as 37 follows: 38 "(a.1)(1) On and after January 1, 2025 2026, the tax imposed pursuant to subsection (a) 39 of this Code section shall be 5.19 percent 4.99 percent for taxable years beginning on or 40 after January 1, 2025 2026; provided, however, that such rate shall be reduced by 0.10 41 0.125 percent annually beginning on January 1, 2026 2027, until the rate reaches 4.99 42 percent, 3.99 percent; provided that such annual reductions in the tax rate shall be subject 43 H. B. 463 - 2 -

26 HB 463/AP to delays as provided in paragraph (2) of this subsection delayed by one year for each 44 year that prospective annual reductions in the standard deduction are delayed for any of 45 the reasons provided in paragraph (1.1) of subsection (a) of Code Section 48-7-27. 46 (2) Each prospective annual reduction in the tax rate that would otherwise occur as 47 provided in paragraph (1) of this subsection shall be delayed by one year for each year 48 that any of the following are true as of December 1: 49 (A) The Governor's revenue estimate for the succeeding fiscal year is not at least 3 50 percent above the Governor's revenue estimate for the present fiscal year; 51 (B) The prior fiscal year's net revenue collection was not higher than each of the 52 preceding three fiscal years' net tax revenue collection; or 53 (C) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not 54 contain a sum that exceeds the amount of the decrease in state revenue projected to 55 occur as a result of the prospective reduction in the tax rates set to occur the following 56 year. 57 (3) The Office of Planning and Budget shall make the determinations necessary to 58 implement the provisions of paragraph (2) of this subsection and shall report its 59 determinations by December 1 of each year to the department, the Speaker of the House 60 of Representatives, the President of the Senate, and the chairpersons of the House 61 Committee on Appropriations Committee, the House Committee on Ways and Means 62 Committee, the Senate Appropriations Committee, and the Senate Finance Committee. 63 This paragraph shall not be applicable after the final reduction to the rate of 4.99 percent 64 occurs." 65 SECTION 2-2. 66 Said title is further amended by revising subsection (b) of Code Section 48-7-26, relating to 67 personal exemptions, as follows: 68 H. B. 463 - 3 -

26 HB 463/AP "(b) Each taxpayer shall be allowed as a deduction in computing his or her Georgia taxable 69 income a personal exemption in the amount of $4,000.00 $5,000.00 for each dependent of 70 such taxpayer; provided, however, that such deduction shall be increased by $125.00 71 annually beginning on January 1, 2027, until such deduction reaches $6,000.00, provided 72 that such increases in such deduction shall be subject to the same delays as those applied 73 to standard deductions as provided in paragraph (1.1) of subsection (a) of Code Section 74 48-7-27." 75 SECTION 2-3. 76 Said title is further amended in subsection (a) of Code Section 48-7-27, relating to 77 computation of taxable net income, by revising the introductory language and paragraph (1), 78 by adding a new paragraph and a new division, and by revising divisions (a)(5)(A)(xii) and 79 (a)(5)(A)(xiii) as follows: 80 "(a) Georgia taxable net income of an individual shall be the taxpayer's federal adjusted 81 gross income, as defined in the United States Internal Revenue Code of 1986, less: 82 (1) At the taxpayer's election, either: 83 (A) The sum of all itemized nonbusiness deductions used in computing such taxpayer's 84 federal taxable income; or 85 (B) A standard deduction in an amount as follows: 86 (i) In the case of a married couple filing a joint return, $24,000.00 $30,000.00; 87 provided, however, that such deduction shall be increased by $750.00 annually 88 beginning on January 1, 2027, until such deduction reaches $36,000.00, provided that 89 such increases in such deduction shall be subject to delays as provided in paragraph 90 (1.1) of this subsection; or 91 (ii) In the case of a single taxpayer, head of household, or married taxpayer filing a 92 separate return, $12,000.00 $15,000.00; provided, however, that such deduction shall 93 be increased by $375.00 annually beginning on January 1, 2027, until such deduction 94 H. B. 463 - 4 -

26 HB 463/AP reaches $18,000.00, provided that such increases in such deduction shall be subject 95 to delays as provided in paragraph (1.1) of this subsection; 96 (1.1)(A) Each prospective increase in the standard deduction that would otherwise 97 occur as provided in divisions (i) and (ii) of subparagraph (B) of paragraph (1) of this 98 subsection shall be delayed by one year for each year that any of the following are true 99 as of December 1: 100 (i) The Governor's revenue estimate for the succeeding fiscal year is not at least 3 101 percent above the Governor's revenue estimate for the present fiscal year; 102 (ii) The prior fiscal year's net revenue collection was not higher than each of the 103 preceding three fiscal years' net tax revenue collection; or 104 (iii) The Revenue Shortfall Reserve provided for in Code Section 45-12-93 does not 105 contain a sum that exceeds the amount of the decrease in state revenue projected to 106 occur as a result of the prospective reduction in the tax rates set to occur the following 107 year. 108 (B) The Office of Planning and Budget shall make the determinations provided in 109 subparagraph (A) of this paragraph and shall report its determinations by December 1 110 of each year to the department, the Speaker of the House of Representatives, the 111 President of the Senate, and the chairpersons of the House Committee on 112 Appropriations, the House Committee on Ways and Means, the Senate Appropriations 113 Committee, and the Senate Finance Committee. This paragraph shall not be applicable 114 after the final increases in the standard deductions provided under divisions (i) and (ii) 115 of subparagraph (B) of paragraph (1) of this subsection occur;" 116 "(xii) For taxable years beginning on or after January 1, 2008, and prior to January 117 1, 2012, retirement income from any source not to exceed an exclusion amount of 118 $35,000.00; and 119 (xiii) For taxable years beginning on or after January 1, 2012, and ending on or 120 before December 31, 2026, retirement income from any source not to exceed an 121 H. B. 463 - 5 -

26 HB 463/AP exclusion amount of $35,000.00 for each taxpayer meeting the eligibility requirement 122 set forth in division (i) or (ii) of subparagraph (D) of this paragraph or an amount of 123 $65,000.00 for each taxpayer meeting the eligibility requirement set forth in division 124 (iii) of subparagraph (D) of this paragraph; and 125 (xiv) For taxable years beginning on or after January 1, 2027, retirement income from 126 any source not to exceed an exclusion amount of $35,000.00 for each taxpayer 127 meeting the eligibility requirement set forth in division (i) or (ii) of subparagraph (D) 128 of this paragraph or an amount of $70,000.00 for each taxpayer meeting the eligibility 129 requirement set forth in division (iii) of subparagraph (D) of this paragraph." 130 SECTION 2-4. 131 Said title is further amended in subsection (a) of Code Section 48-7-27, relating to 132 computation of taxable net income, by striking "and" at the end of paragraph (14), by 133 replacing the period at the end of paragraph (15) with a semicolon, and by adding new 134 paragraphs to read as follows: 135 "(16)(A) For all taxable years beginning on or after January 1, 2026, and ending on 136 December 31, 2028, any amount of qualified overtime compensation, as such term is 137 defined in Section 225 of the Internal Revenue Code, up to $1,750.00 received by a 138 full-time employee paid by an hourly wage. 139 (B) Notwithstanding subparagraph (A) of this paragraph, for employers governed by 140 the federal National Railway Labor Act, the exemption provided in this paragraph shall 141 apply to hourly component overtime compensation as defined in applicable collective 142 bargaining agreements. 143 (C) For each tax year beginning on or after January 1, 2026, and ending on 144 December 31, 2028, each employer shall submit to the department, on forms prescribed 145 by the department, the total amount of qualified overtime compensation received by 146 full-time employees paid by an hourly wage and the total number of employees to 147 H. B. 463 - 6 -

26 HB 463/AP which such compensation was paid. The data shall be provided monthly or quarterly 148 and shall be due no later than the due date for the corresponding monthly or quarterly 149 withholding tax returns, except that such data may be provided at the end of the year 150 for the 2026 tax year. 151 (D) The department may require additional information of employers and shall be 152 authorized to adopt rules and regulations to provide for the administration of this 153 paragraph. 154 (E) This paragraph shall stand repealed and reserved on December 31, 2028; and 155 (17)(A) For all taxable years beginning on or after January 1, 2026, any amount up 156 to $1,750.00 received in cash tips. 157 (B) For each tax year beginning on or after January 1, 2026, each employer shall 158 submit to the department, on forms prescribed by the department, the total amount 159 received by employees in cash tips and the total number of employees to which such 160 compensation was paid. The data shall be provided monthly or quarterly and shall be 161 due no later than the due date for the corresponding monthly or quarterly withholding 162 tax returns, except that such data may be provided at the end of the year for the 2026 163 tax year. 164 (C) The department may require additional information of employers and shall be 165 authorized to adopt rules and regulations to provide for the administration of this 166 paragraph. 167 (D) As used in this paragraph, the term: 168 (i) 'Cash tips' means cash received by an individual in an occupation that customarily 169 and regularly receives tips, including tips received from customers that are paid in 170 cash or charged and, in the case of an employee, tips received under any tip-sharing 171 arrangement, but only if such amount is paid voluntarily without any consequence in 172 the event of nonpayment, is not the subject of negotiation, and is determined by the 173 payor. 174 H. B. 463 - 7 -

26 HB 463/AP (ii) 'Occupation that customarily and regularly receives tips' means any occupation 175 which has been designated as such and given a Treasury Tipped Occupation Code as 176 set forth in the Federal Register by the secretary of the treasury of the United States. 177 Occupations excluded under Section 63 of the Internal Revenue Code shall also be 178 excluded for purposes of this paragraph. 179 (E) This paragraph shall stand repealed and reserved on December 31, 2028." 180 PART III 181 SECTION 3-1. 182 The collection of funds set aside for taxpayer relief pursuant to this part shall be known and 183 may be cited as the "Taxpayer Relief Fund." 184 SECTION 3-2. 185 Part 1 of Article 4 of Chapter 12 of Title 45 of the Official Code of Georgia Annotated, 186 relating to management of budgetary and financial affairs, is amended by revising Code 187 Section 45-12-93, relating to revenue shortfall reserve, reservation of surplus state funds, 188 appropriation and release of funds, and limitations, as follows: 189 "45-12-93. 190 (a) There shall be a reserve of state funds known as the 'Revenue Shortfall Reserve.' 191 (b) The amount of all surplus in state funds existing as of the end of each fiscal year shall 192 be reserved and added to the Revenue Shortfall Reserve. Funds in the Revenue Shortfall 193 Reserve shall carry forward from fiscal year to fiscal year, without reverting to the general 194 fund at the end of a fiscal year. The Revenue Shortfall Reserve shall be maintained, 195 accumulated, appropriated, and otherwise disbursed only as provided in this Code section. 196 H. B. 463 - 8 -

26 HB 463/AP (c) For each existing fiscal year, the General Assembly may appropriate from the Revenue 197 Shortfall Reserve an amount up to 1 percent of the net revenue collections of the preceding 198 fiscal year for funding increased K-12 needs. 199 (d) The Governor may release for appropriation by the General Assembly a stated amount 200 from funds in the Revenue Shortfall Reserve that are in excess of 4 8 percent of the net 201 revenue of the preceding fiscal year. 202 (e) As of the end of each fiscal year, an amount shall be released from the Revenue 203 Shortfall Reserve to the general fund to cover any deficit by which total expenditures and 204 contractual obligations of state funds authorized by appropriation exceed net revenue and 205 other amounts in state funds made available for appropriation. 206 (f) The combined Revenue Shortfall Reserve and the Midyear Adjustment Reserve 207 existing on May 9, 2005, shall become the Revenue Shortfall Reserve provided for in this 208 Code section. 209 (g) Any other provision of law notwithstanding, the General Assembly is authorized to 210 appropriate $7 million for State Fiscal Year 2005 from the Revenue Shortfall Reserve. 211 (h) The Revenue Shortfall Reserve shall not exceed 15 20 percent of the previous fiscal 212 year's net revenue for any given fiscal year. Any amount of undesignated surplus funds in 213 excess of 20 percent of the previous fiscal year's net revenue may be used for tax relief 214 pursuant to Acts of the General Assembly." 215 PART IV 216 SECTION 4-1. 217 Said title is further amended by repealing and reserving Code Section 48-7-29.11, relating 218 to tax credits for eligible teleworking expenses. 219 H. B. 463 - 9 -

26 HB 463/AP SECTION 4-2. 220 Said title is further amended by repealing Code Section 48-7-40.1A, relating to tax credits 221 for personal protective equipment manufacturers. 222 SECTION 4-3. 223 Said title is further amended by repealing Code Section 48-7-40.1B, relating to tax credits 224 for manufacturers of medical equipment and supplies, pharmaceuticals, and medicine. 225 SECTION 4-4. 226 Said title is further amended by repealing and reserving Code Section 48-7-40.15, relating 227 to tax credits for base year port traffic increases. 228 SECTION 4-5. 229 Said title is further amended by repealing Code Section 48-7-40.15A, relating to tax credit 230 for employer with base year port traffic increases. 231 SECTION 4-6. 232 Said title is further amended by repealing and reserving Code Section 48-7-40.16, relating 233 to tax credits for alternative fuel, low-emission, and zero-emission vehicles and electric 234 vehicle chargers. 235 SECTION 4-7. 236 Said title is further amended by repealing and reserving Code Section 48-7-40.18, relating 237 to tax credits for businesses headquartered in state and full-time jobs. 238 H. B. 463 - 10 -

26 HB 463/AP SECTION 4-8. 239 Said title is further amended by repealing and reserving Code Section 48-7-40.20, relating 240 to tax credits for businesses engaged in manufacturing cigarettes for exportation. 241 SECTION 4-9. 242 Said title is further amended by repealing and reserving Code Section 48-7-40.22, relating 243 to tax credits for business enterprises that purchase or lease a motor vehicle to provide 244 transportation for employees. 245 SECTION 4-10. 246 Said title is further amended by repealing and reserving paragraphs (24), (61), and (69), 247 repealing paragraph (33.1), and repealing and reenacting paragraph (36) of Code Section 248 48-8-3, relating to exemptions relative to state sales and use taxes, to read as follows: 249 "(36) After the effective date of this Act, no new certificates of exemption from sales and 250 use tax for the sale of machinery and equipment or repair, replacement, or component 251 parts for such machinery and equipment which is used for the primary purpose of 252 reducing or eliminating air or water pollution shall be issued pursuant to the former 253 provisions of this paragraph as such provisions existed prior to the effective date of this 254 Act; provided, however, that any certificate of exemption issued prior to the effective 255 date of this Act shall continue to be governed by the provisions of this paragraph as such 256 provisions existed immediately prior to the effective date of this Act;" 257 PART V 258 SECTION 5-1. 259 This Act shall become effective upon its approval by the Governor or upon its becoming law 260 without such approval and shall be applicable to all taxable years beginning on or after 261 January 1, 2026. 262 H. B. 463 - 11 -

26 HB 463/AP SECTION 5-2. 263 All laws and parts of laws in conflict with this Act are repealed. 264 H. B. 463 - 12 -