Gov. Brian Kemp on Thursday unveiled plans to put more than $2 billion back in the pockets of taxpayers through tax cuts and rebates.
If approved by the General Assembly, the tax relief and budget proposals would cement Kemp’s legacy of returning money to taxpayers. Since 2021, Georgia taxpayers have received more than $9.7 billion in income, motor fuel and property tax relief.
“These investments were possible because we rejected the idea that, just because government takes in more money, it should turn right around and spend it on more government,” Kemp told lawmakers Thursday.
Delivering his final State of the State address at the Georgia State Capitol, Kemp announced plans to rebate $1.2 billion in income taxes later this year. Single filers would receive up to $250, heads of household would get up to $375 and married couples filing jointly would get up to $500.
If approved, it would be the fourth rebate in five years for Georgia taxpayers.
Kemp also announced plans to reduce Georgia’s income tax rate from 5.19% to 4.99% this year. The governor and legislators have approved a series of cuts that have reduced Georgia’s income tax rate from 5.75% in 2022.
The $1 billion cost of the latest rate cut proposal is baked into Kemp’s budget plans unveiled Thursday.
His $40.4 billion revised general fund budget for fiscal year 2026, which ends in June, includes $2,000 checks for teachers and other state employees. It’s the latest in a series of one-time payments to employees in recent years.
The budget also includes $325 million to provide a state match for a scholarship endowment for needy college students. The plan calls for the fund to eventually reach $1.8 billion, with private donors contributing much of the cost.
The revised 2026 budget also includes $1.8 billion for new toll lanes on I-75 south of Atlanta, $250 million for local road projects and $200 million for new interchanges on Ga. 316.
Kemp also proposed a $36.8 billion general fund spending plan for fiscal year 2027, which begins in July. Among other things, it includes $264 million for school construction and renovation, $12 million to reduce pre-K class sizes, $26.8 million to hire more correctional officers and $16.9 billion in bond funds for renovations and improvements to state parks.
The fiscal ’27 budget also includes $1.5 billion to keep up with growing enrollment in schools, colleges, health care and other existing programs.
For the first time in three years, the state would borrow money to pay for capital projects. The state Office of Planning and Budget estimates Georgia will save $3.3 billion in interest payments over 20 years by paying cash for capital projects the last two years. But the fiscal ’27 budget envisions borrowing more than $650 million to pay for new projects.
If lawmakers approve all of Kemp’s proposals, state’s budget surplus and “rainy day” reserves would be reduced from about $14.6 billion to about $10 billion. That’s still high by historical standards, and Kemp warned lawmakers they’ll need money in the bank to deal with tough times in the future.
One possible source of trouble: federal budget cuts to Medicaid health insurance and other programs that could cost Georgia billions of dollars in years ahead.
“Showing fiscal restraint in continuing to build on these reserves, instead of spending it all in the future, may not be popular or easy,” Kemp told lawmakers. “But the Georgia of today that has been built over the last 25 years does not stand on sticks made of ‘easy’ or ‘politically convenient.’”
Kemp’s proposal is the opening gambit in a budget process that will take most of the legislative session. Legislative leaders have their own budget priorities.
House Speaker Jon Burns wants to put literacy coaches in every elementary school in Georgia, while Lt. Gov. Burt Jones has the Senate focused on eliminating Georgia’s individual income tax — the state’s largest source of revenue.
The House of Representatives and Senate have scheduled joint budget hearings next week.
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