Honorable Shaw Blackmon
Chairman, House Ways and Means
133 State Capitol
Atlanta, GA 30334
SUBJECT: Fiscal Note
February 6, 2025
Greg S. Griffin
State Auditor
House Bill 111 (LC 59 0028-EC)
Dear Chairman Blackmon:
The bill would reduce the flat personal income tax rate from 5.39 percent to 5.19 percent effective
January 1, 2025. Under current law the corporate income tax rate is statutorily set equal to the personal
income tax rate, so the rate change proposed will result in the same rate change for the corporate
income tax.
Impact on State Revenue
Georgia State University’s Fiscal Research Center (FRC) estimated that the bill would decrease state
revenues as shown in Table 1 . FY 2026 would be the first year of the bill’s full effect. The appendix
provides details of the analysis.
Table 1. Estimated State Revenue Effects of LC 59 0028- EC
($ millions) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Personal Income Tax ($96.9) ($758.4) ($610.9) ($638.9) ($665.5) ($694.1)
Corporate Income Tax ($54.9) ($110.5) ($113.8) ($120.2) ($127.9) ($133.8)
Total ($151.8) ($868.9) ($724.7) ($759.0) ($793.4) ($827.9)
Impact on State Expenditures
The Department of Revenue would be able to implement the bill with existing resources.
Respectfully,
Greg S. Griffin Richard Dunn, Director
State Auditor Office of Planning and Budget
GSG/RD/mt
270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone 404.656.2180
Fiscal Note for House Bill 111 (LC 59 0028-EC)
Page 2
Analysis by the Fiscal Research Center
HB 1437 (2022) and SB 56 (2023) established that the existing progressive tax rate system be replaced
by the single rate of 5.49 percent effective January 1, 2024. Subject to specific criteria, this rate would
decline by 0.10 percent every year until the rate reaches 4.99 percent. The look-forward and look-back
conditions that trigger these reductions are not impacted by the subject bill. HB 1015 (2024) amended
the schedule to reduce the flat rate applicable beginning with tax year (TY) 2024 to 5.39 percent.
Additionally, HB 1023 (2024) established that the corporate income tax rate would equal the current
statutory personal income tax rate.
The fiscal impacts related to the personal income tax (PIT), detailed in Table 1, are based on the
following data as assumptions:
• The current personal income tax budget projections were used to establish the expected income
tax base (i.e., Georgia taxable income) for TY 2025–30, shown in Table 2 below.
• Current budget projections already anticipate the proposed 0.2 percent rate reduction. Thus, the
estimated effects, shown in Table 2 as the revenue value of 0.2 percent of the tax base, represent
a reduction not from budget projections but from current- law revenues projected under a 5.39
percent flat rate.
• This rate reduction would impact withholding upon passage with 16.7 percent of the TY 2025
effect impacting FY 2025 revenues and the remainder impacting FY 2026, assuming
withholding is adjusted effective May 1, 2025. The amount of the revenue impact realized in FY
2025 depends on the timing of implementation of new withholding tables, an earlier
implementation increasing the impact this year and reducing that of FY 2026, and vice versa for
a later implementation.
• For periods after the initial year, tax year effects are converted to fiscal years assuming that
approximately 46 percent of the effect impacts the fiscal year ending June 30 of the given tax
year and the balance impacting the following fiscal year.
Table 2. Taxable Income and Revenue on the Marginal 0.2% by Tax
($ millions) TY 2025 TY 2026 TY 2027 TY 2028 TY 2029 TY 2030
Individual Tax Base $290,782 $298,669 $313,487 $326,451 $340,190 $355,159
PIT Revenue from 0.2% $582 $597 $627 $653 $680 $710
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenue Impact ($96.9) ($758.4) ($610.9) ($638.9) ($665.5) ($694.1)
The proposed reduction in the personal income tax rate would also result, under current law, in the
same rate change to the corporate income tax. The fiscal impacts of the corporate income tax (CIT) rate
reduction reported in Table 1 are based on the following data and assumptions:
• Current net corporate income revenue projections from OPB were used to establish the expected
amount of revenues for FY 2025–30, shown in Table 3 below.
• These revenues were adjusted to remove the portion attributable to corporate net worth and
financial institutions business occupation taxes (CNWT and FIBOT, respectively), which are included in the total corporate tax projections but are not affected by this bill. Together, CNWT
and FIBOT accounted for approximately 2.9 percent of the combined collections from these taxes and the CIT during FY 2022–24. The FY 2025–30 projected CIT revenues were reduced
by this percentage to isolate CIT revenues.
• The current statutory rate of 5.39 percent was used to establish the expected corporate income
tax base (i.e., Georgia taxable corporate income) for FY 2025–30.
Fiscal Note for House Bill 111 (LC 59 0028-EC)
Page 3
• Corporations’ tax years frequently do not start on January 1, creating variation in effective tax
rates during the early portion of calendar year 2025. IRS national data as to shares of corporate
taxable income reported by month of firms’ tax year-ends were used to estimate pro forma
effective tax rates for FY 2025–30.
• Fiscal impact estimates are based on a constant CIT rate of 5.39 percent for the baseline.
Baseline revenues, pro forma effective tax rates, and projected CIT revenues based on these data and
assumptions are presented in Table 2. The difference between the baseline expected revenues and the
proforma revenues are the fiscal impact estimates in table1.
Table 3. Baseline (5.39%) and Pro Forma Projected State CIT Revenues
($ millions) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Current-Law CIT Baseline
$3,341
$3,160 $3,066 $3,239 $3,447 $3,607
No CNWT or FIBOT
Pro Forma CIT Effective Tax Rates
Effective Tax Rate 5.39% 5.30% 5.20% 5.19% 5.19% 5.19%
CIT Revenue $3,286 $3,049 $2,953 $3,119 $3,319 $3,473