Key Takeaways:
- Georgia updated its tax code but declined to adopt several key federal OBBBA tax provisions, creating important state-federal differences.
- Eligible Georgia taxpayers may receive surplus refunds of $250–$500 under H.B. 1000 if they qualify and file required returns.
- Businesses should monitor H.B. 463 and review ASC 740 implications if Georgia’s proposed income tax rate cuts become law.
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Georgia wrapped up its 2026 legislative session on April 3, with several important state and local tax (SALT) bills either already signed into law by Gov. Brian Kemp or awaiting his signature.
Here’s a look at the biggest developments and what they could mean for businesses and individuals.
H.B. 1199: Georgia Updates Its Tax Code, but Doesn’t Adopt Every Federal Change
Governor Kemp signed H.B. 1199 on March 20, updating Georgia’s IRC conformity date to the Internal Revenue Code as enacted on January 1, 2026. The update applies to tax years beginning on or after January 1, 2025, and incorporates many, but not all, provisions from the federal One Big Beautiful Bill Act (OBBBA), a major federal tax package enacted in 2025.
Georgia chose to decouple from several federal tax changes, including:
- The federal exclusions for tips and overtime pay, as well as deductible car loan interest. State lawmakers indicated these provisions would require separate legislation because of their budget impact (see H.B. 463 below).
- The increased federal SALT deduction cap. Georgia will continue using the existing $10,000 limitation established under the Tax Cuts and Jobs Act.
- Federal bonus depreciation changes under IRC Sections 168(k) and 168(n). However, Georgia will adopt the higher Section 179 expensing limits.
- Changes to the treatment of domestic research and experimental (R&E) expenditures under Section 174A. Georgia will continue allowing taxpayers to immediately deduct qualifying R&E costs rather than requiring capitalization and amortization.
- Federal changes to the business interest expense limitation under IRC Section 163(j).
The bill also temporarily suspended Georgia’s motor fuel excise tax (commonly known as the gas tax) for 60 days following enactment.
H.B. 1000: Additional Tax Refunds for Eligible Georgians
Kemp also signed H.B. 1000, authorizing another round of surplus income tax refunds for eligible taxpayers who filed a Georgia return for 2024 and will file one for 2025. Refund amounts range from $250 to $500, depending on filing status. The legislation also authorizes counties to adopt special sales and use taxes to help fund healthcare projects.
H.B. 463: Proposed Income Tax Cuts Still Await Final Action
One of the session’s most closely watched bills is H.B. 463, which remains pending before Governor Kemp.
If enacted, the bill would:
- Reduce Georgia’s personal and corporate income tax rate from 5.19% to 4.99% beginning in 2026.
- Allow additional annual rate reductions of 0.125%, potentially reaching 3.99%, provided state revenue targets continue to be met.
- Increase the standard deduction and dependent exemptions beginning in 2026.
- Provide a temporary state tax exclusion for certain overtime pay and tips, although the exclusion would be smaller than the corresponding federal benefit under the OBBBA.
Accounting Considerations
For companies applying ASC 740, the timing of H.B. 463 matters.
Until the legislation is officially enacted, businesses should continue monitoring its status when evaluating current tax provisions. Deferred tax calculations should also reflect only enacted tax rates. Because future rate reductions under the bill depend on Georgia meeting revenue benchmarks, those potential decreases introduce additional uncertainty into deferred tax accounting.
Other Bills Worth Watching
Not every proposal advanced this session. Efforts to repeal Georgia’s technology-related sales tax exemptions, including exemptions for qualifying high-technology data center equipment, were unsuccessful, meaning those incentives remain available.
Meanwhile, S.B. 33 would allow local governments to impose a 1% sales tax to offset expanded homestead property tax exemptions. As of this publication, the bill is still awaiting the governor’s decision.
What Taxpayers Should Do Now
Although much of Georgia’s tax framework remains unchanged, businesses should review how the state’s IRC conformity decisions affect their 2025 and 2026 tax planning.
In particular:
- Verify that tax software correctly reflects Georgia’s nonconformity to several federal OBBBA provisions before filing returns.
- Continue monitoring H.B. 463 if future income tax rates could affect tax planning or financial reporting.
- Businesses preparing financial statements under ASC 740 should carefully evaluate the timing of any enacted tax rate changes and their impact on deferred tax calculations.
How MGO Can Help
Georgia’s 2026 tax legislation includes several important departures from federal law, making state tax compliance and planning more complex.
MGO’s State and Local Tax professionals help businesses understand how evolving legislation affects tax filings, financial reporting, and long-term planning. Whether you’re evaluating Georgia’s conformity rules, preparing ASC 740 provisions, or assessing the impact of pending legislation, our team can help you navigate the changes with confidence.
Contact us to learn more.