Understanding Georgia State Income Tax

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Georgia is one of 43 states where individuals are subject to income taxation in addition to the federal taxes withheld from their earnings. The Georgia Department of Revenue refers to personal income as individual income, and it includes more than just salary earned from employment. Profitable investments, grants, monetary gifts, cash received as part of an inheritance are examples of money that is considered individual income and therefore subject to state taxation.

Taxpayers in Georgia are classified into brackets determined by their annual income range. There are six brackets in two categories: individuals who file single tax returns and couples who file jointly. Each bracket has a base tax amount in addition to a marginal tax rate. Due to the manner in which the brackets are set up, most Georgia taxpayers will fall under the highest income bracket. Here are the Georgia income brackets as of 2018:

Single Taxpayers

$0 to $750 – one percent
$750 to $2,250 – $7.50 plus two percent
$2,250 to $3,750 – $37.50 plus three percent
$3,750 to $5,250 – $82.50 pus four percent
$5,250 to $7,000 – $142.50 plus five percent
$7,000 and over – $230 plus six percent

Couple Filing Joint Tax Returns

$0 to $1,000 – one percent
$1,000 to $3,000 – $10 plus two percent
$3,000 to $5,000 – $50 plus three percent
$5,000 to $7,000 – $110 plus four percent
$7,000 to $10,000 – $190 plus five percent
$10,000 and over – $340.00 plus six percent

When calculation Georgia income tax, the first step is to add up all taxable income. In the specific case of earnings reported on Form W-2 of the Internal Revenue Service, the aggregate gross income must be used, which is the salary received before federal taxes and other deductions are subtracted; the same goes for other sources of income that may have already been taxed at the federal level. Let’s say a Georgia taxpayer sells shares of Microsoft and makes a profit on the transaction; if the stock brokerage withholds capital gains taxes, the full gain must be reported as personal income.

Once the total personal income received during the year has been added up, applicable tax deductions must be subtracted. In 2018, the Georgia deductions are $2,300 for individuals filing single returns and $3,000 for couples filing jointly; however, other deductions such as the Georgia 529 college savings plan may apply.

The final step of the income tax calculation involves applying the marginal tax rate and base amount according to the appropriate bracket.

Let’s say an Atlanta family earns $80,000 in combined annual salaries; if they take the Georgia tax deduction for couples filing jointly, their adjusted income would be $77,000. Since this family falls under the highest income bracket of six percent. Their tax would be calculated as follows:

$77,000 * 0.06 = $4,620

The base tax amount for this income bracket is $340, which should be added to marginal tax rate. This bring the tax due to $4,960. In 2017, the average income tax paid by Georgia families was $1,876.