On April 18, 2024, Georgia Governor Brain Kemp approved HB 1015 and HB 1021, which, retroactive to January 1, 2024, reduce the personal income tax rate and raise the dependent exemption.

Under HB 1015, the personal income tax rate is reduced from 5.49% to 5.39% retroactive to January 1, 2024. If revenue targets are met, additional annual reductions of 0.10% will apply starting January 1, 2025, until the tax rate reaches 4.99%. HB 1015 is an acceleration of the tax cuts previously set to begin January 1, 2025, under HB 1437. (See tax alert 2022-0732.)

HB 1021 increases the personal income tax dependent exemption from $3,000 to $4,000 starting January 1, 2024.

Note that while HB 1015 and HB 1021 apply to the entire 2024 tax year, they are effective July 1, 2024.

Supplemental wages

For bonus payments and other irregular compensation payments, employers have the option of using a supplemental income tax withholding rate, which depends on the employee's estimated annual income. The rates below, which currently apply for 2024, will be updated to reflect the tax cuts under HB 1015.

The updated income tax withholding formula and tables, once available, will be published here.

Ernst & Young LLP insights

Employers should consider notifying employees of the personal income tax changes that apply in 2024 and to review the information they have provided on Form G-4, State of Georgia Employee's Withholding Allowance Certificate.