How Georgia income tax works: federal AGI, the $30,000 deduction, 4.99%

Georgia taxes income at one flat rate, and for 2026 that rate is 4.99%, down from 5.19% in 2025. The return, Form 500, starts from federal adjusted gross income, line 11 of the 1040, and then does three things of its own. It adjusts that figure up or down on Schedule 1, with the retirement income exclusion and the Social Security subtraction doing most of the work. It takes off a standard deduction of $15,000 for a single person or $30,000 for a married couple filing jointly, or Georgia itemized deductions if you itemized federally, and $5,000 for each dependent. Then it multiplies what is left by 4.99%. There are no brackets, no local income taxes anywhere in the state, and no personal exemption for you or your spouse. For 2026 the deduction and the rate both moved in the taxpayer’s favor at once, which is why most Georgia refunds this spring will be larger than last year’s.

Starting from AGI has a consequence that catches people every year. Anything the federal return deducts after AGI never reaches Georgia: the federal standard deduction, the $6,000 senior deduction, the new deductions for tips, overtime and car-loan interest, the 20% qualified business income deduction. Anything deducted before AGI, an IRA contribution, an HSA deposit, student loan interest, half of self-employment tax, flows through and cuts Georgia tax at 4.99% too. A $7,000 IRA contribution saves $349 of Georgia tax; a $7,000 federal tips deduction saves nothing in Georgia beyond the state’s own $1,750 subtraction.

Who files

A full-year resident reports all income, wherever it was earned, and claims a credit on line 18 for tax paid to another state on income taxed by both. A part-year resident or a nonresident with Georgia-source income files the same Form 500 with Schedule 3, which works out the Georgia share and prorates the deductions. The one exception is the commuter: a resident of another state whose only Georgia activity is a job here owes nothing if Georgia wages are under the lesser of 5% of total wages or $5,000. Married couples use the filing status they used federally. A resident must file when a federal return is required or when income exceeds the Georgia standard deduction (the Department of Revenue’s residency page still shows the 2025 thresholds; the 2026 figures are to come). Form 500EZ is gone; everyone files Form 500. Who counts as a resident, and what happens the year you move, is in Moving to Georgia.

Where it starts: federal AGI

Line 8 of Form 500 is federal adjusted gross income, copied from the 1040. The lines above it collect filing status, residency code and the count of dependents, which matters more in Georgia than in most states because each one is worth $5,000. Georgia uses the federal definition of a dependent and adds one of its own: an unborn child with a detectable heartbeat at any point in the year is a dependent on line 7b. No other state has that rule.

Schedule 1: additions and subtractions

Schedule 1 turns federal AGI into Georgia AGI. Most wage earners have nothing on it. Retirees, savers and small business owners usually do.

The retirement exclusion is the biggest line on most Georgia returns over age 62 and has its own article, Georgia for retirees. Social Security is subtracted separately and does not use up the exclusion.

The new tips and overtime subtractions. Congress gave tipped and hourly workers deductions of up to $25,000 and $12,500 for 2025 through 2028. Georgia decoupled from both in HB 1199 and wrote smaller versions in HB 463: up to $1,750 of cash tips in an occupation on the Treasury’s tipped-occupation list, and up to $1,750 of qualified overtime, meaning the premium half of time-and-a-half, for full-time hourly employees. Each is worth about $87 of Georgia tax. Whether a joint return with two qualifying spouses gets $3,500 of each is not yet stated (verify), and the Department has not published where the subtractions go on the 2026 Schedule 1. The federal senior deduction and the car-loan interest deduction get no Georgia counterpart at all.

Depreciation. Georgia has never followed federal bonus depreciation, including the 100% bonus the 2025 federal law made permanent. A sole proprietor, landlord or farmer who wrote off a truck in one year federally adds that back and subtracts the depreciation Georgia allows over the asset’s life. Georgia does follow the higher section 179 dollar limits (verify).

The deduction: standard or itemized, your choice is already made

Form 500 line 11 is the standard deduction: $15,000 for single, head of household and married filing separately, $30,000 for married filing jointly, for 2026. That is up 25% from the $12,000 and $24,000 of 2025, and it now sits within a few hundred dollars of the federal $16,100 and $32,200. Two things are missing that other states have. There is no extra amount for age 65 or blindness; the 2025 form had none and we have found none for 2026. And head of household gets the single amount, $15,000, not something between single and joint as on the federal return.

You do not get to pick. If you took the federal standard deduction you take Georgia’s. If you itemized federally you must itemize for Georgia on line 12, and Georgia itemized deductions start from the federal Schedule A total, add back any state income tax you deducted, and keep the state-and-local-tax piece at $10,000 regardless of the $40,000 federal cap. The result is often smaller than the federal figure and sometimes smaller than the Georgia standard deduction you are not allowed to take. A couple with $28,000 of federal itemized deductions, $4,000 of it state income tax, has a Georgia itemized deduction of $24,000 against a $30,000 standard deduction they cannot use: $6,000 less deduction, $299 more tax. The legislature’s answer, since 2024, is the eligible itemizer credit on line 19: $300 per taxpayer, $600 on a joint return where both spouses are taxpayers, nonrefundable. For that couple the credit covers the gap; for a couple with $12,000 of state income tax in their Schedule A, it does not. Households near the line should run both returns both ways before deciding to itemize at all.

Line 14 is the dependent exemption: $5,000 for each dependent on line 7, up from $4,000. At 4.99% each dependent is worth about $250 of tax. There is no exemption for the taxpayer or spouse; that disappeared when Georgia moved to a flat tax in 2024 and the standard deduction was raised to absorb it.

The rate

Georgia AGI minus the deduction minus the dependent exemptions is Georgia taxable income, line 15. Multiply by 4.99% and that is the tax, line 16. Wages, interest, dividends, capital gains, rent, lottery winnings and unemployment are all taxed at the same rate; Georgia has no preferential rate for capital gains and no local income tax to add on top. Atlanta, Savannah, the counties and the school districts all live on property and sales taxes.

The rate is not fixed for long. HB 463 cut it to 4.99% for 2026 and set up a mechanism for 0.125-point cuts in later years, down to a floor of 3.99%, in any year the state passes three revenue tests certified on December 1. The same test steps the standard deduction up $375 and $750 and the dependent exemption up $125. The first possible step is tax year 2027, so the 2027 rate is either 4.865% or 4.99% and will not be known until the Department announces it. None of these figures is indexed for inflation; they move only when the legislature or the trigger moves them. The whole 2026 story, and the trigger mechanics, are in What’s new in Georgia for 2026.

The credits

Georgia credits are nonrefundable with almost no exceptions. They can bring the tax to zero; they cannot produce a refund by themselves, and Georgia has no earned income credit. That is the single biggest difference between a Georgia return and the returns of its neighbors to the north for a working family.

Returns claiming any Series 100 credit on Schedule 2 or 2B must be filed electronically. The family credits are worked through in Credits and breaks for Georgia families.

Withholding and estimated payments

Georgia withholding runs off Form G-4, the state’s own certificate. Each employer applies the standard deduction and the allowances claimed to its own wages and withholds 4.99% of the rest. For one job it comes out close. For several small jobs it does not: each employer treats the full $15,000 deduction as its own, so a worker with four $14,000 jobs can have no Georgia tax withheld on $56,000 of wages. Claim the deduction on one G-4 and zero on the others, or add a flat extra amount per paycheck. The 2026 wrinkle ran the other way: employers withheld at 5.19% until the rate cut was signed in May, and single-job workers will see those four months in their refund.

Income with no withholding on it, self-employment, rent, interest, a capital gain, calls for estimated payments on Form 500-ES or through Georgia Tax Center, due April 15, June 15, September 15 and January 15, once you expect more than $1,000 of income not covered by withholding, after deductions. Georgia’s safe harbor is easier than the federal one: 70% of this year’s Georgia tax, or 100% of last year’s, in timely installments. The penalty is 9% a year on each installment’s shortfall, figured on Form 500 UET.

How to file

Most Georgia returns go in electronically with the federal return, and the refund arrives separately, usually within 21 days. A first-time Georgia filer, or anyone who has not filed in five years, gets a paper check whatever the return asks for. The return is due April 15, 2027. A federal extension extends Georgia automatically to October 15, 2027, if you attach the Form 4868 or the IRS confirmation; without one, file Form IT-303. The extension is to file, not to pay; pay with Form IT-560 or through Georgia Tax Center by April 15. If the IRS changes your federal return, Georgia wants an amended Form 500 within 180 days. Dates, forms and links are in Georgia calendar and forms.

What trips people up

• Itemizing for Georgia with the federal Schedule A total, without adding back the state income tax, or taking the Georgia standard deduction after itemizing federally.
• The federal senior, tips or overtime deduction expected to reduce Georgia tax. Only Georgia’s own $1,750 subtractions count.
• The retirement income exclusion taken by a 60-year-old, or taken once on a joint return instead of per spouse.
• A Path2College contribution nobody mentioned, because the federal return did not ask.
• Bonus depreciation on a Schedule C or E carried into Georgia with no adjustment.
• The $250 child credit claimed for a child who turned 6 during the year.
• The extension treated as an extension to pay.