The 2026 Georgia legislative session concluded April 3, with several significant state and local tax (SALT) developments either signed by Gov. Brian Kemp or awaiting his signature.
H.B. 1199
On March 20, Kemp signed H.B. 1199, which serves as Georgia’s annual Internal Revenue Code conformity bill and updates the state’s revenue code to account for changes made by the One Big Beautiful Bill Act (OBBBA).
The legislation updates the general conformity date to the IRC as enacted as of January 1, 2026 (effective for tax years beginning on or after January 1, 2025), and reflects important legislative policy determinations regarding which federal tax provisions Georgia will adopt for state income tax purposes. Notable federal provisions from which Georgia will decouple include:
- No tax on tips or overtime wages and the deductible car loan interest provisions under IRC Sections 224, 225, and 163(h)(4), respectively. State lawmakers said those policies would require separate legislation, given the significant fiscal considerations involved (see details on H.B. 463 below).
- Increase to the SALT deduction cap for individual income tax purposes as provided for under IRC Section 164. Georgia will remain at the $10,000 limit enacted under the Tax Cuts and Jobs Act (TCJA).
- Special accelerated depreciation allowance business income tax provisions under IRC Section 168(k) and (n). Georgia will partially conform to the changes to the immediate expensing provisions of some depreciable property under IRC Section 179; specifically, the increased limits to the maximum deduction amount under IRC Section 179(b).
- Treatment of U.S. domestic research and experimental (R&E) expenditures under IRC Section 174A. Georgia previously decoupled from the capitalization and amortization requirement of R&E costs enacted under the TCJA, allowing immediate expensing of such costs in the year incurred, which it will continue to allow.
- Limitations on the current deductibility of interest expense incurred under IRC Section 163(j).
H.B. 1199 also suspends the state’s motor fuel excise tax (also known as the “gas tax”) for 60 days from the date of the bill’s enactment. The gas tax relief will expire May 19 (see related FAQ).
H.B. 1000
Kemp also has signed H.B. 1000, which provides additional income tax surplus refunds to eligible taxpayers who filed a Georgia income tax return for 2024 and will file a return for 2025. The surplus refund amount ranges from $250 to $500, depending on the taxpayer’s filing status. The bill also allows counties to enact special sales and use taxes to fund healthcare projects.
H.B. 463
H.B. 463 would reduce Georgia’s personal and corporate income tax rates from 5.19% to 4.99% for 2026, with potential further annual rate reductions of 0.125% down to a floor of 3.99%, pending the state meeting revenue collection targets. The bill also would increase the standard deduction and dependent exemptions for individual income tax purposes for tax years beginning on or after January 1, 2026, and provide a temporary reduced exclusion of overtime pay and tips subject to state tax as compared to the amounts exempt from federal income tax under the OBBBA.
As of the date of this publication, Kemp has yet to sign the bill. He has 40 days following the close of the legislative session to sign or veto the bill or allow it to become law without signature.
Further, with the final enactment status of H.B. 463 pending as of the date of this publication, taxpayers subject to ASC 740 should consider when to properly account for the immediate 2026 tax rate change in their current income tax provisions under the accounting standard. For deferred income tax purposes, taxpayers should also be mindful that ASC 740 requires deferred income taxes to be measured using enacted rates expected to apply to taxable income in the periods in which the deferred tax items are expected to reverse. The contingent nature of the subsequent years’ tax rate reductions in the bill leaves open whether and when such reduced rates will go into effect. As such, taxpayers should be cognizant of the deferred income tax implications associated with tax rates that have yet to be enacted and therefore have uncertain effective dates.
Other Noteworthy Developments
Georgia’s technology-related sales tax exemptions, including that for high technology data center equipment, will remain in place after repeal efforts failed.
Under S.B. 33, local jurisdictions would be able to implement a 1% sales tax to offset the revenue effects from expanding property tax exemptions for primary residences. As of the date of this publication, the bill was awaiting Kemp’s signature.
BDO Insights
- Given the timing of enactment and the effective date of H.B. 1199, taxpayers should verify that their tax software accounts for the substantial provisions rejecting conformity to the OBBBA to be sure return filings are accurate.
- Because Kemp has not yet signed H.B. 463, taxpayers subject to ASC 740 should continue to monitor the bill’s status for purposes of accounting for the immediately effective tax rate reduction in their income tax provisions. Taxpayers also should be mindful of the contingent nature of subsequent years’ tax rate reductions provided for in the bill in the context of deferred income tax accounting.
Please visit BDO’s State & Local Tax Services page for more information on how BDO can help.