Georgia is used to sitting at the top of the regional heap: the Empire State of the South, home to the unofficial capital of the South, even the “best state to do business” for umpteen years running.
But when you occupy that perch, others try to dethrone you. Some of their efforts ought to jolt Georgia out of any complacency it may suffer.
During the 2025 legislative session that just ended, our lawmakers voted to lower the flat tax rate on personal and corporate income to 5.19%, the second straight year they’ve reduced it by a fifth of a percentage point. Not long ago we had several brackets topping out at 6%, so this represents progress.
Then again, everything is relative. Famously, Florida and Tennessee have no personal income tax (though they have corporate tax rates of 5.5% and 6.5%, respectively). But look at what’s happening across the South:
- South Carolina lawmakers are considering a flat personal income tax rate of 2.49% (down from today’s top rate of 6.2%). That enviable move would produce the lowest flat rate among states with an income tax.
- North Carolina is continuing down the tax-cutting path it began in 2013. Back then, the state had three tax brackets on the personal side, the highest of which was 7.75%, and a flat rate of 6.9% on the corporate side. The state is now poised to lower its flat personal rate to 3.99% next year; the corporate rate sits at 2.25% with a path to zero by 2030.
- Alabama lawmakers are considering a handful of tax reform proposals that would lower the state’s sales tax on groceries from 3% to 2% and exempt more income from taxation. Its top rate on personal income is 5%, along with a flat corporate rate of 6.5%.
- Louisiana recently replaced its brackets with a flat personal rate of 3% and a flat corporate rate of 5.5% (down from top rates of 4.25% and 7.5%, respectively).
Most recently – and dramatically – Mississippi enacted a law reducing its flat personal income tax rate of 4.4% to 3% by 2030 and creating a series of “triggers” that could zero it out altogether. If that happens, Mississippi would be the first state to eliminate its income tax (excepting Alaska, which did so thanks to an oil boom most states can’t replicate).
Kentucky, Missouri, Arkansas and Oklahoma, to name a few, all have top or flat personal rates below 5%. Texas is already in the no-income-tax club.
All of which means, very soon, the only Southern state with a higher personal income-tax rate than Georgia might be Virginia, with its top rate of 5.75%.
Even if Georgia lawmakers come back next year and continue their recent trend of accelerating the schedule of tax cuts laid out in a 2022 law, they will only make it to 4.99%.
Thank goodness for Alabama, I guess – by just a hundredth of a point.
Tax rates aren’t the end-all, be-all of economic competitiveness. And income taxes aren’t the only kind of tax; it’s worth noting that some states, notably Mississippi and Louisiana, are raising other tax rates to offset some lost income-tax revenue.
But tax rates do matter. They especially matter for entrepreneurs and small businesses, which disproportionately represent the job creation and future potential of an economy. And while other taxes matter as well, income taxes garner headlines for a reason: They’re the most economically damaging taxes because they discourage work, savings and investment – the lifeblood of an economy.
Good fiscal stewardship has allowed Georgia to build up billions of dollars in surpluses in recent years. Setting aside a healthy chunk of that money in a Taxpayer Relief Fund to facilitate even faster tax cuts deserves to be a top priority next year if lawmakers want to keep Georgia on top, where we belong.
