Georgia Property Tax Reform Options 2025
The Georgia Local Options Homestead Property Tax ExemptionAn exemption from tax excludes certain incomes, revenues, or even taxpayers. The Internal Revenue Service (IRS) grants tax-exempt status to nonprofits that meet certain requirements. This allows them to avoid paying income tax.
As we have written elsewhere, the amendment, which was approved by nearly 63 per cent of voters in November last year, could create a more complex administrative property tax system for the state, and discourage new entrants to the real estate market. H.B. 581 contained a provision that allowed local governments to opt out of the new exemption, which effectively functions as an assessment limit. 581, a provision in H.B. Many local governments chose to keep the existing system despite the relatively complex opt-out process. In the end, two parallel local taxA Tax is a mandatory payment collected by local, State, and National governments from individuals and businesses to cover costs of general government goods, services, and activities.
systems may emerge in Georgia, undermining the principles of simplicity and neutrality by potentially influencing taxpayer behavior.
How Widespread Is Opting Out?
According to the data shared with the Tax Foundation by the Georgia Secretary of State’s office, 316 local government entities in the state decided to opt out of the new homestead exemption. There are five consolidated city-counties that make up 63 percent of each group of local governments, 47 counties (30%), 141 cities and townships (26%) and 123 school districts (68%) among them.
Importantly the largest cities and counties opt out. All five of the biggest counties — Fulton, Gwinnett Cobb DeKalb and Chatham — have school systems that have opted out. The general county governments of Gwinnett and Cobb chose to opt out as well. All five of the largest cities – some of which are consolidated city counties – also opted out of H.B. About two-thirds (64,8 percent) of Georgia counties, representing nearly 83 per cent of the state’s population, opted out of H.B. These counties are usually larger and more economically important to the state. A detailed map is presented below.
Opt-outs, which legislators initially considered a last-resort option under H.B. 581 became a common phenomenon. In response, the legislature adopted–and signed by the governor–H.B. While allowing local governments more flexibility and time to deliberate their decision may be seen as a positive development, it is unlikely that many will opt back in, given the high initial number of opt-outs and the strong involvement of local government associations. While allowing greater flexibility and more time for local governments to deliberate their decision may be seen as a positive development, it is unlikely that many will choose to opt back in–given the high initial number of opt-outs and the strong involvement of local government associations.
Consequences for the Local Tax System in Georgia
H.B. In addition to authorizing the statewide homestead exclusion that would limit annual increases to residential net assessed values, H.B. 581 also allowed for a new local option. Many governments exempt items like groceries. Broadening the base, such as adding groceries, could lower rates. A sales tax should exclude business-to-business transfers that, when taxed cause tax pyramiding.
up to 1 percent of property TaxA property tax is levied primarily on immovable properties like land and buildings as well as tangible personal property which is movable like vehicles and equipment. Property taxes are a major source of revenue for state and local governments in the U.S. They help fund schools, roads and police services, among other things.
relief. If all local governments hadn’t chosen to opt out, then the system would have remained relatively neutral, albeit more complex. However, since a significant number of local governments–particularly the largest cities, counties, and school systems–chose to opt out, this raises the risk of creating two separate local tax systems in Georgia, with differing property tax rules and sales tax rates. This could have unintended consequences, such as influencing people’s behavior when choosing where to live or where to shop for groceries. Even more important, there is the potential for a major issue with overlapping tax jurisdictions. Imagine living in Atlanta where the city and school district have both opted out of the new system, but the county (e.g. Fulton County) has decided to stay in. The property tax bills may become more confusing and the property tax liabilities of residents in neighboring jurisdictions could differ dramatically within a few short years. Since H.B. 581 was passed, a large number of local governments have chosen to opt out of the system. This indicates a general dissatisfaction with the proposed changes. H.B. This reform could also include changes to the sales tax system, which currently allows for a wide range of local sales tax rates, from 2 to 5 percent, to make it more uniform and disincentivize cross-border shopping even within Georgia’s borders. This reform could also include changes to the sales tax system, which currently allows for a wide range of local sales tax rates, from 2 to 5 percent, to make it more uniform and disincentivize cross-border shopping even within Georgia’s borders.Stay informed on the tax policies impacting you.Subscribe to get insights from our trusted experts delivered straight to your inbox.
Subscribe to our Newsletter
Share this article
Facebook Email
