Georgia’s tax relief bills could create a major math problem for schools

Several bills aimed at providing tax relief to Georgia residents are moving through the Legislature this year. If they’re all successful, though, some economists and public officials aren’t sure how some local municipalities will make ends meet.

That’s especially true for public school districts, which rely on a combination of local property taxes and state revenue to operate.

State lawmakers are considering bills that would reduce or eliminate taxes, three of which have already been approved by the Senate. One would cap property values at the rate of inflation, which could affect property tax collections for local school districts. Another pair of bills would significantly reduce personal income taxes, eliminating them altogether for residents making $50,000 a year or less.

Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, is the lead sponsor of Senate Bill 382, which provides a homestead exemption. Speaking on the floor of the Senate, he said there are mechanisms school districts can use to make up the lost revenue.

“They can still increase the millage rate, and the majority of property, which is not homeowner property, can still go up unchecked,” he said.

That means school districts could raise the property tax rate for commercial (non-homestead) properties. Some metro Atlanta officials are skeptical that could address such changes. Atlanta Public Schools Chief Financial Officer Lisa Bracken said at a school board meeting Monday that 78% of the school system’s estimated $1.3 billion budget for the upcoming fiscal year comes from local revenue, with 62% of that coming from residential properties.

Bracken pointed out that APS increased its homestead exemption in 2018 from $30,000 to $50,000 and gave another $50,000 exemption to senior citizens last year.

“So exemptions are kind of ticking away (at the budget),” Bracken said. “Also, we are seeing a compression of the commercial values. This is all as expenditure challenges continue to increase.”

Bracken said the district enrolls 7,000 fewer students than it did in 2016. Meanwhile, she said, other costs have risen. For example, the cost of health benefits have increased 78% in the same time period.

Several school districts and local governments opted out of the homestead exemption last year, citing millions of dollars in lost revenue. Cobb County schools estimated the exemption would cost the district $43 million a year. Gwinnett schools said it would cost them $100 million over three years. Senate Bill 382 closes the “opt out” loophole, requiring local governments and schools to participate.

Property taxes make up the bulk of revenue collected by most metro Atlanta school districts, while rural school systems rely more on state funding. Ross Rubenstein, a professor of public management and policy at Georgia State University, said diminishing both of those revenue streams could leave districts scrambling.

“If property taxes disappeared, (districts would) really need to rely heavily on additional state funding,” Rubenstein said. “But if the state eliminates or drastically reduces income tax revenue, I think it’s probably very unlikely that would happen.”

Some lawmakers have suggested school districts could make up for the lost revenue by raising sales taxes. Rubenstein said if that happens, consumers could change their behavior.

“If sales taxes went up substantially, it’s certainly possible that people would cut back on purchases as much as they can, which would then also result in lowering the sales tax revenue that comes in,” he said.

Currently, local sales taxes are capped at 9% in Georgia. Ashley Young, the senior education analyst at the Georgia Budget and Policy Institute, said some municipalities are already close to that.

“So it really does feel like school districts are having the rug pulled from under them, because where is it going to be made up?” she said.

Young says the state has provided a smaller share of funding to school districts in recent years. In 2014, the state provided an average of 51% of the funding for a Georgia school system, according to GBPI data. That percentage declined over the years, hitting 40% in 2025.

Sen. Blake Tillery, R-Valdosta, chair of the Senate appropriations committee and a candidate for lieutenant governor, has authored two bills that would significantly reduce income taxes. He estimates that one of them, Senate Bill 476, would eliminate income taxes for two-thirds of Georgians in the first year. He said the bill pays for the cuts by eliminating tax credits to build data centers and some tax incentives for banks and insurance companies — not by raising sales taxes.

“Why should a family have to pay for sales tax for a laptop when their kid’s going to Kennesaw State, but if they buy $15 million worth of computers because they’re building a data center, they pay no sales tax at all?” Tillery said.

Tillery said lawmakers would review the process after the second year to see if it’s working. If so, they’ll continue to lower the income tax rate until it reaches zero in 2032.

Rubenstein said getting rid of exemptions makes sense.

“Getting rid of those (credits), having a broader base where everything is taxed and lowering rates is not a bad idea,” he said. “I think most economists would say that is how a tax system should be designed.”

Tillery has said his bills aimed at cutting income taxes are not on a “collision course” with the House’s bill that would reduce property taxes.

But Young and Rubenstein say a significant reduction in those revenue streams would hit school districts hard.

“At the state level, not only are we seeing less of an investment on average, now they’re … in the process of making laws that are then going to impact what school districts are able to do,” Young said. “So it’s just a double whammy.”

Bills that would reduce or eliminate personal taxes:

Senate Bill 382 - caps the increase in a home’s assessed value at the rate of inflation. The cap is mandatory, which essentially reverses an ‘opt out’ provision in a 2024 homestead exemption law.

Status: Passed the Senate.

Senate Bill 476- would raise the personal income tax exemption to $50,000 for individuals and $100,000 for joint filers. The bill eliminates several corporate tax incentives. The income tax rate is lowered each year until it reaches zero in 2032.

Status: Passed the Senate.

Senate Bill 477 - would drop the personal income tax rate to 4.99% in 2026 and phases the reduction to 3.99% by 2028. The reductions only happen if the state hits specific revenue growth targets.