Georgia state leadership is proposing the first-ever cut to the state income tax rate.
Gov. Nathan Deal, Lt. Gov. Casey Cagle and House Speaker David Ralston on Tuesday rolled out their proposal to reduce the state’s top tax rate, which is paid by most Georgians, to 5.75 from 6 percent. House Bill 918 also leaves open the chance for an additional cut to 5.5 percent in 2020.
The proposed cuts would head off an estimated $3.6 billion income tax windfall for state government generated by changes to federal tax law.
Increases of the standard deduction at the federal level, along with other changes to deductions and exemptions, would create the huge tax haul for the state — unless the Georgia General Assembly approves the tax cut dropped on Tuesday.
Deal’s office estimated that based on existing law, the state would collect $3.6 billion in new revenue from individuals paying the state income tax over the next five years.
This latest windfall would come after hefty revenue increases for the state in 2017 because of Georgia’s improving economy and the restructuring of taxes funding transportation projects in the state.
“This bill keeps more of taxpayers’ hard-earned money in their pockets by doubling the standard deduction and reducing income tax rates,” Deal said in a press conference on Tuesday. “It will save taxpayers more than $5 billion over the next five years.”
Along with cutting the top rate, HB 918 also doubles the state’s standard deduction to $6,000 from $3,000 for married couples filing jointly.
“Most importantly, this framework sets the stage for continued reductions — building on the Trump administration’s tax reform to allow Georgians to keep more of what they earn,” Cagle said in the same press conference.