Georgia Republicans move to scrap state income tax by 2032 despite concerns

ATLANTA (AP) — Eliminating state income taxes sounds great to many voters, but Republicans backing the push in multiple states still face questions about whether such big tax cuts can be made without raising other taxes or sharply cutting state funding for education, health care and other services.

Georgia on Wednesday became the latest state to launch a bid to abolish its personal income tax, with Republican leaders in the Senate backing a proposal to zero it out by 2032. This year, Georgia’s personal income tax is projected to collect about $16.5 billion, or 44% of the state’s general revenue.

The push is driven by politics. Lt. Gov. Burt Jones, the Republican who leads the state Senate, has made eliminating income taxes a centerpiece of his 2026 campaign for governor. State Sen. Blake Tillery, a Vidalia Republican who led a committee to abolish the tax, is among candidates to succeed Jones as lieutenant governor.

“This is the first vote that we are going to get to take to address affordability,” Tillery said.

But it’s unclear if the proposal will pass. Georgia House Republicans may want to continue nibbling away at the tax in smaller bites, preferring a “measured” approach. Republican House Speaker Jon Burns of Newington said Wednesday that his big 2026 goal is to eliminate property taxes for homeowners, but said he’s willing to consider the Senate plan.

Republican Gov. Brian Kemp, serving his last year, has been cool to total elimination of the income tax. He declined to comment Wednesday on the Senate plan, but spokesperson Carter Chapman said Kemp wants “to continue lowering taxes and putting more money in Georgians’ pockets as he has throughout his term.”

The state’s Democratic minority opposes the move, saying it would mostly benefit high earners and the state needs money to provide services.

Multiple GOP-led states seek tax cuts

Iowa, Kentucky, Mississippi and Missouri have all set goals to abolish the personal income tax, joining eight other states that don’t tax personal income. Eight other states besides Georgia are cutting personal income tax rates this year, according to the Tax Foundation, a Washington, D.C., group generally skeptical of higher taxes.

“We’ve seen a lot of states cut their income tax rates in the last four or five years, especially during the COVID-19 pandemic and coming out of it,” said Aravind Boddupalli, senior researcher at the Urban-Brookings Tax Policy Center in Washington, D.C.

Supporters say cuts help a state compete for new residents and businesses, pointing to growth in Texas and Florida, two states without personal income taxes.

“Your income tax is a tax on productivity,” said Manish Bhatt, who studies state taxes for the Tax Foundation. “If you are taxing productivity, you are potentially losing out on economic gains.”

Front-loading cuts for lower earners

Georgia has already been cutting income taxes, taking what was once a top income tax rate of 6% and lowering it to a 5.19% flat rate. Republicans broadly support a further cut for individual and corporate taxpayers to 4.99% this year, worth an estimated $800 million in foregone tax revenue.

The Senate plan would then freeze the corporate rate and focus on individual tax cuts. It proposes in 2027 to exempt the first $50,000 of income for a single person or $100,000 for a married couple, up from $12,000 and $24,000 now.

Faced with Democratic criticism about affordability, the big increase in exempt income is central to Republicans’ own arguments about how they can make money stretch farther. About 70% of Georgians reported less than $100,000 of taxable income in 2024, according to state figures.

“It is a plan that gives benefits first to hardworking families,” Tillery said.

The initial rate cut, plus the exemption proposal, would lower Georgia revenue by $3.8 billion in its 2027 budget year. Tillery says the state could pay by using surplus tax revenue and shifting back to paying for capital expenditures through borrowing instead of cash. But those moves probably wouldn’t cover the foregone revenue even in the first year, much less $13 billion more in cuts to get to zero.

Tillery said revenue should be bolstered by trimming business income and sales tax breaks, saying legislators should reduce “corporate welfare.” But lawmakers and Kemp have balked at curtailing those measures in recent years.

Some tax cuts backfired

Tax cuts haven’t always been a political bonanza. In Kansas, after Republicans under Gov. Sam Brownback cut income taxes steeply more than a decade ago, voters revolted at budget cuts and lawmakers imposed multiple tax increases to cover persistent budget shortfalls, including restoring some income tax cuts. Democratic Gov. Laura Kelly won her first term in 2018 by framing the race as a referendum on Brownback’s policies.

“State income taxes are only bad if you fundamentally don’t believe that the services, the public investments that state governments provide, are worth anything,” said Matt Gardner, a senior fellow with the left-leaning Institute on Taxation and Economic Policy .

In Missouri, Republican Gov. Mike Kehoe and GOP legislative leaders have made phasing out the state’s income tax a top priority for the session starting Wednesday. They’re looking to expand sales taxes to services which currently are untaxed to help offset lost revenue.

“We want to do this in a smart, efficient way that’s not going to have the state go off some sort of fiscal cliff,” Missouri House Majority Leader Alex Riley told The Associated Press on Tuesday.

But expanding sales taxes could fall more heavily on poorer taxpayers. The liberal-leaning Georgia Budget and Policy Institute estimated that if Georgia doesn’t expand its sales tax, the combined state and local sales tax rate would have to rise sharply from the current 7.42% to recover revenue losses.

All that leads to questions about income-tax elimination plans, even from Republicans. Burns, the Georgia House speaker, said he’s “open” to any plan that benefits Georgians.

“But we’ve got to have the details, and it has to work,” Burns said. “We need to make sure we can continue to do vital services — health care, public safety, education, all the things we talked about.”

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Associated Press writer David Lieb contributed from Jefferson City, Missouri.