Georgia income tax moves to flat rate: How much taxpayers could save in 2024
ATLANTA - Georgia is one of several U.S. states lowering individual income tax rates in 2024, meaning more financial relief for taxpayers in the Peach State.
Gov. Brian Kemp signed HB 1437 into law on April 26, 2022. The new law replacd the graduated personal income tax with a flat rate of 5.49%, which took effect Jan. 1, 2024, with gradual rate reductions until the flat rate reaches 4.99%. The rate reductions can be delayed by year for each year if necessary.
Georgia Income Tax Flat Rate Schedule
If the delays are not needed, this is the schedule for personal income tax rate until January 2029.
- Jan. 1, 2024: 5.49%
- Jan. 1, 2025: 5.39%
- Jan. 1, 2026: 5.29%
- Jan. 1, 2027: 5.19%
- Jan. 1, 2028: 5.09%
- Jan. 1, 2029: 4.99%
Gov. Kemp has proposed accelerating the decrease in the state's individual income tax rate. If the proposal is approved, the tax rate for 2024 would be 5.39%. This would mean a cut of 36 basis points from the Tax Year 2023 rate of 5.75%.
The Office of Planning and Budget estimates the legislation would save Georgia taxpayers around $1.1 billion in 2024.
Other states making changes
Thirteen other states have individual income tax rate reductions taking effect this year, according to an analysis from the Tax Foundation, a tax policy research organization.
Those states include Arkansas, Connecticut, Indiana, Iowa, Kentucky, Mississippi, Missouri, Montana, Nebraska, New Hampshire (interest and dividends income only), North Carolina, Ohio, and South Carolina, the foundation said.
New IRS brackets take effect, meaning paycheck could be bigger
Higher federal income tax brackets and standard deductions also took effect at the beginning of January, potentially giving Americans a chance to increase their take-home pay this year and shield more of their income from the IRS.
The IRS announced higher limits for the federal income tax bracket and standard deductions in November. The increase is intended to avoid a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.
The IRS makes such adjustments annually, but in times of high inflation, the increases are more significant and impactful for taxpayers. This year, the tax brackets are shifting higher by about 5.4%.
The higher thresholds where tax rates take effect could mean savings for millions of Americans across all income brackets.
The inflation-adjusted elements will apply to the 2024 tax year, meaning returns filed in 2025.
To calculate your estimated withholding, go to the IRS website for their income tax calculator.
When will the IRS start accepting tax returns in 2024?
Meanwhile, the tax season officially begins on Jan. 29, marking the first day that the IRS will begin accepting and processing 2023 tax returns. The agency said it expects more than 128.7 million individual tax returns to be filed by the April 15 deadline.
This year, the IRS is also redesigning and simplifying the long and often complicated notices it sends to taxpayers.
Each year, the tax-collecting agency sends about 170 million notices to individual taxpayers regarding credits, deductions and taxes owed. But the notices have been previously "criticized as too long, filled with complex legal jargon and difficult to understand," Treasury Secretary Janet Yellen said during a call with reporters.
"Redesigned notices will be shorter, clearer and easier to understand," Yellen said. "Taxpayers will see the difference when they open the mail and when they log into their online accounts."
Kelly Hayes with FOX Television Stations and FOX Business contributed to this report.