Georgia State Income Tax Rates and Flat Rate Explained for 2025

Key Takeaways

• HB 111 reduces Georgia’s state income tax rate from 5.39% to 5.19%, effective retroactively from January 1, 2025.
• Employers must update payroll to withhold taxes at 5.19% starting July 1, 2025, affecting all employees and supplemental wages.
• Dependent exemption rises to $4,000 per dependent, providing greater tax relief for families starting in 2025.

Georgia’s state income tax system is undergoing important changes in 2025, with the passage of HB 111 marking a significant shift for residents, newcomers, and employers. These updates affect how much tax is taken from paychecks, the way businesses plan their finances, and the steps individuals must follow when filing their state taxes. This update provides a clear summary of what has changed, who is affected, the effective dates, required actions, and what these changes mean for pending and future tax filings. The goal is to help everyone—whether you’re a long-time Georgia resident, a new arrival, or an employer—understand what to expect and what steps to take next.

Summary of What Changed

On April 15, 2025, Governor Brian Kemp signed HB 111 into law, reducing Georgia’s state income tax rate for individuals from 5.39% to 5.19%. This change is retroactive to January 1, 2025, meaning it applies to all income earned throughout the year, not just income earned after the law’s official start date. The law officially takes effect on July 1, 2025, but the lower rate covers the entire 2025 tax year. The corporate income tax rate is also set at 5.19% for 2025, matching the individual rate.

Georgia uses a flat tax rate system, so everyone pays the same percentage, no matter how much they earn. There are no tax brackets. This is different from many other states that use a graduated system, where higher earners pay a higher percentage.

Who Is Affected by HB 111 and the New Tax Rate?

• All Georgia Residents: Anyone living in Georgia 🇺🇸 who earns taxable income will see the new 5.19% rate applied to their 2025 earnings.
• Nonresidents and Part-Year Residents: If you earned income in Georgia 🇺🇸 during 2025, even if you lived in another state for part of the year, you may need to file a Georgia state income tax return using the new rate.
• Employers and Payroll Providers: All employers must update their payroll systems to withhold state income tax at the new 5.19% rate starting July 1, 2025.
• Businesses: The corporate income tax rate is also 5.19% for 2025, so companies must plan for this change.
• Families: The dependent exemption has increased from $3,000 to $4,000 per dependent, offering more relief for families with children or other dependents.

Effective Dates and Key Deadlines

• April 15, 2025: HB 111 signed into law by Governor Brian Kemp.
• January 1, 2025: The 5.19% rate applies to all income earned from this date forward (retroactively).
• July 1, 2025: Employers and payroll providers must start withholding at the new 5.19% rate.
• Tax Filing Season (Early 2026): When filing 2025 state income tax returns, all income for the year will be taxed at 5.19%, regardless of when it was earned or withheld.

Required Actions for Taxpayers and Employers

For Employees and Individuals:
– No Immediate Action Needed: You do not need to change your tax forms or take any special steps right now. Employers will handle the withholding changes.
– Check Your Pay Stubs: Starting July 1, 2025, you should see a slight increase in your take-home pay as the withholding rate drops.
– Refund of Over-Withholding: If too much tax was withheld from your pay before July 1, 2025, you will get this money back when you file your 2025 state tax return.
– File Using the New Rate: When you file your 2025 Georgia state income tax return, use the 5.19% rate for all income earned in 2025.

For Employers and Payroll Providers:
– Update Payroll Systems: Make sure your payroll software or provider is set to withhold at the new 5.19% rate starting July 1, 2025.
– Communicate with Employees: Let your employees know about the change and what it means for their paychecks.
– Supplemental Income: Apply the new 5.19% rate to all supplemental wages, such as bonuses, paid after July 1, 2025.

For Businesses:
– Corporate Tax Planning: Adjust your financial planning and estimated tax payments to reflect the new 5.19% corporate income tax rate for 2025.

Implications for Pending Applications and Tax Filings

If you are in the process of moving to Georgia 🇺🇸, starting a new job, or waiting to file your 2025 taxes, here’s what you need to know:

• Pending Payroll Adjustments: If your employer withheld tax at the old 5.39% rate for the first half of 2025, don’t worry. The extra amount will be refunded when you file your 2025 return.
• New Arrivals: If you move to Georgia 🇺🇸 during 2025, your Georgia-source income will be taxed at 5.19%. Make sure to update your state tax withholding forms with your new employer.
• Pending Tax Returns: For any amended or late 2025 tax returns, use the 5.19% rate for all income earned in 2025.
• Supplemental Wages: If you receive a bonus or other supplemental pay, it will be taxed at 5.19% for the entire year, even if it was paid before July 1, 2025.

Historical Context and Policy Evolution

Georgia 🇺🇸 has moved from a more complicated, multi-bracket income tax system to a flat tax in recent years. In 2024, the state switched to a single flat rate of 5.39%. HB 111 accelerated the planned rate reduction, dropping it to 5.19% for 2025 instead of the previously expected 5.29%. The law also sets up further annual reductions of 0.10% each year until the rate reaches 4.99% in 2027, as long as the state meets certain revenue targets.

Revenue Conditions for Future Reductions

The law includes “revenue triggers” to make sure the state can afford these tax cuts. If Georgia 🇺🇸 does not meet specific revenue growth and savings requirements, the planned rate reductions can be delayed by one year at a time. This helps protect the state budget from unexpected drops in income.

Practical Implications for Taxpayers

• Simplicity: The flat tax rate makes it easier for people to figure out how much they owe. There are no complicated brackets to worry about.
• Predictability: With the rate set for the whole year, you can plan your finances more easily.
• Family Relief: The higher dependent exemption means families will pay less tax for each child or dependent.
• Property Tax Relief: A new local option sales tax of up to 1% has been introduced to help fund property tax relief. This may help homeowners indirectly by lowering their property tax bills.

Step-by-Step Process for Taxpayers

1. Employers Adjust Withholding: Starting July 1, 2025, your employer will automatically change your state income tax withholding to the new 5.19% rate.
2. Check Your Pay: Look for a small increase in your take-home pay after July 1, 2025.
3. File Your Taxes: When you file your 2025 Georgia state income tax return in early 2026, use the 5.19% rate for all your 2025 income.
4. Get a Refund if Needed: If too much tax was withheld before July 1, you’ll get that money back as part of your tax refund.
5. Supplemental Income: Any bonuses or extra pay you receive in 2025 will also be taxed at 5.19%.

Future Outlook and Pending Changes

• Annual Reductions: The state income tax rate is scheduled to drop by 0.10% each year until it reaches 4.99% in 2027, as long as the state’s finances are strong enough.
• Possible Delays: If the state does not meet its revenue goals, the rate reductions could be delayed by a year.
• Legislative Proposals: Some lawmakers are talking about more tax cuts or new exemptions to make Georgia 🇺🇸 even more attractive to families and businesses.

Key Stakeholders and Official Statements

• Governor Brian Kemp: Stated that HB 111 is meant to give tax relief to Georgia 🇺🇸 residents and make the state more competitive.
• Georgia State Legislature: Passed HB 111 with support from both major parties, showing broad agreement on the need for lower taxes.
• Payroll Providers: Companies like Paylocity are updating their systems to make sure the new rate is applied correctly.
• Tax Foundation and NerdWallet: Experts note that Georgia’s flat tax is simple and among the lowest in the Southeast, which may attract new residents and businesses.

Summary Table: Georgia State Income Tax Rates (2024–2027)

Common Questions and Concerns

• Who Must File? If you are a full-time resident and required to file a federal tax return, or if you have Georgia-specific taxable income, you must file a state return. The income threshold is $24,000 for joint filers and $12,000 for single filers.
• Nonresidents and Part-Year Residents: If you earned income in Georgia 🇺🇸, you may need to file a state return, even if you lived elsewhere for part of the year.
• Impact on Paychecks: Most people will see a small increase in their take-home pay starting July 1, 2025, due to the lower withholding rate.
• Refunds for Over-Withholding: Any extra tax withheld before July 1, 2025, will be refunded when you file your 2025 return.
• Dependent Exemption: The increase from $3,000 to $4,000 per dependent means families will pay less tax for each child or dependent.

Official Resources and Where to Get Help

For the latest tax forms, instructions, and updates, visit the Georgia Department of Revenue website. This is the official source for all state tax information, including forms, filing instructions, and updates about rate changes. Employers and employees can also contact their payroll provider, such as Paylocity, for questions about withholding and compliance.

Expert Analysis and Broader Impact

According to analysis by VisaVerge.com, Georgia’s move to a flat tax system with a gradually decreasing rate is designed to make the state more appealing to both individuals and businesses. The simplicity of a flat rate helps people plan their finances, while the lower rates may attract new residents and companies. However, the law’s built-in revenue triggers mean that future reductions are not guaranteed—they depend on the state’s financial health.

The alignment of individual and corporate tax rates is meant to remove confusion and make business decisions easier. By keeping the rates the same, Georgia 🇺🇸 hopes to encourage investment and job creation without making the tax system more complicated.

Actionable Takeaways and Next Steps

• For Individuals: No immediate action is needed. Watch for changes in your paycheck after July 1, 2025, and remember to use the 5.19% rate when filing your 2025 state tax return.
• For Employers: Update payroll systems by July 1, 2025, and communicate the changes to your employees.
• For New Arrivals: If you move to Georgia 🇺🇸 in 2025, update your state tax withholding forms and be aware of the new flat rate.
• For Families: Take advantage of the higher dependent exemption when filing your taxes.
• For Businesses: Adjust your tax planning to reflect the new 5.19% corporate rate.

By staying informed and following these steps, you can make sure you’re ready for Georgia’s new state income tax rules in 2025 and beyond. For more details, always refer to the Georgia Department of Revenue for the most up-to-date information and official forms.

Learn Today

Flat Tax Rate → A single tax percentage applied equally to all taxable income, without graduated brackets.
Dependent Exemption → A tax deduction amount per dependent that reduces taxable income for families.
Retroactive → Applying a law or rule to a date before it officially took effect.
Payroll Withholding → The amount of tax an employer deducts from an employee’s paycheck.
Revenue Triggers → Conditions that must be met for future tax rate reductions to take place.

This Article in a Nutshell

Georgia’s HB 111 lowers its flat state income tax rate to 5.19% for 2025, retroactive to January 1. Employers update payrolls by July 1, increasing take-home pay. Families benefit from a higher dependent exemption. This change simplifies tax planning and will impact all residents, newcomers, and businesses statewide.
— By VisaVerge.com