ATLANTA — Georgia’s Governor Brian Kemp, along with Republican leaders in the legislature, is advocating for an additional round of income tax refunds fueled by the state’s continually growing financial reserves.
On Tuesday, they unveiled a proposal for tax rebates that would allow single filers to receive refunds of up to $250, head of household taxpayers to get as much as $375, and married couples filing jointly to benefit from refunds reaching up to $500. This initiative follows similar rebate programs that were implemented in 2022 and 2023, costing around $1.1 billion each time. The proposal will require legislative approval next year, however, it is anticipated to pass with Republicans expected to retain their majority in the General Assembly.
With Georgians in the midst of early voting ahead of the November 5 Election Day, the announcement could serve as a strategic advantage for several Republican incumbents and challengers vying for seats in the state House. Additionally, this move allows Kemp to address economic concerns related to inflation, resonating with the presidential campaign themes of Republican Donald Trump, who aims to reclaim Georgia’s 16 electoral votes after a narrow loss to Democrat Joe Biden in 2020.
Kemp remarked, “Even if inflation has decreased, prices remain high.” He emphasized that families experience this every day at grocery stores and gas stations.
It’s worth noting that individuals with lower income levels may pay little to no state income tax. The governor also related this new proposal to previous initiatives, including the suspension of the state tax on both gasoline and diesel fuels, designed to help citizens impacted by Hurricane Helene. He mentioned discussions with legislative leaders regarding additional hurricane relief efforts, particularly focused on quick financial support for farmers who may have suffered losses in crops such as cotton and pecans.
In prior years, refunds were automatically granted to individuals who filed state income tax returns. While these refunds were not counted as taxable income for state purposes, they were subject to federal income tax.
Though Kemp has positioned his tax relief measures as a means to combat inflation, some economists argue that tax cuts can inadvertently increase inflation by putting more money into circulation, which often leads to rising prices.
Kemp has consistently underestimated Georgia’s tax revenue collection in recent years, resulting in the state accumulating significant financial reserves. A report released recently indicated that more than $11 billion remains in unallocated surplus funds that state leaders can utilize at their discretion after four consecutive years of budget surpluses.
In addition to surplus cash, Georgia boasts other reserves, including a rainy day fund holding the maximum legal limit of $5.5 billion and a lottery reserve exceeding $2.4 billion. By June 30, the total cash reserves for the state amounted to an impressive $19.1 billion, which represents more than half of the anticipated state revenue expenditure for the current budget year.
The state has also channeled its excess funds into various projects, using the surplus to finance construction that would typically require borrowing, bolstering state pension funds, and accelerating planned roadwork.
During his reelection campaign, Kemp aimed to distribute cash to as many voters as possible, successfully defeating Democrat Stacey Abrams. His administration also implemented gas tax reductions, increased salaries for state employees, and provided $350 payments to over 3 million residents benefiting from programs like Medicaid, subsidized child health insurance, food assistance, or cash welfare resources.