Georgia Budget & Policy Institute: Income Tax Bill Offers Earned Income Tax Credit Upside, Flat Tax Downside

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Members of the Georgia House are set to consider a large income tax proposal that contains a mix of positive reforms and measures that raise significant concerns. Some aspects of the bill offer benefits to working class Georgia families, while others could harm similar taxpayers or unduly jeopardize state revenues. While the bill provides a reasonable starting point for a productive conversation about tax reform, key changes are needed to avoid causing more harm than good.

The income tax alterations proposed in House Bill 329 include a new flat tax rate of 5.4 percent to replace Georgia’s graduated structure with rates ranging from 1 percent to 6 percent; a new nonrefundable Earned Income Tax Credit (EITC) set at a 10 percent match of the federal credit; and an overdue fix to a tax break that allows some taxpayers to deduct the value of their state income taxes twice. Here are the key effects of the House proposal.

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