Publisher’s Note: In 1994, yours truly left a TV news/weather position in Augusta to earn $10,000 more at a similar job in Spokane, Washington. It was a double-play as there was/is no state income tax. The cost of living was outrageous on rent, food, gas, etc., and it ate up the extra $$$. I returned to Augusta a year later!
Our columnist, Dr. Rick Franza, dug into the pros and cons of Georgia mirroring Washington State’s state income tax decisions.
GEORGIA LEGISLATIVE PROCESS
In the month of November, I had a couple of experiences which raised my interest in the topic of state taxes; in particular, the potential elimination of Georgia’s state income tax. First, on November 6, I attended the Columbia County Chamber of Commerce’s 2025 Pre-Legislative Breakfast, which was held in anticipation of Georgia’s legislative session, scheduled to begin on January 12, 2026. Local broadcast stalwart Brad Means moderated the panel discussion that included Georgia State Senator Lee Anderson and Georgia State Representatives Gary Richardson and Mark Newton. One of the initial questions from the audience addressed the issue of the potential elimination of the state income tax, an issue that will clearly be a prime area of debate during the upcoming legislative session.
The effort to potentially eliminate Georgia’s state income tax is being led by current Lieutenant Governor Burt Jones, who is also a candidate for the Republican nomination to run for Governor in 2026, and Georgia Senator Blake Tillery (R-Vidalia), who chairs the Senate Appropriations Committee. In July, Jones announced the creation of the Senate Special Committee on Eliminating Georgia’s Income Tax, which is chaired by Tillery, to explore ways to achieve this goal. When Anderson, Richardson, and Newton, all Republicans, addressed the question of potentially eliminating the state income tax, they were each very circumspect. They each understood that while the elimination of such taxes sounds great, it comes with some serious potential downsides, which are discussed below.
MY FIRST-HAND EXPERIENCE IN WASHINGTON STATE
The second experience, which further piqued my interest in the topic of state taxes, was our Thanksgiving visit to my daughter and her fiancé in Seattle. This was our third visit since their move in the Summer of 2023. One thing that became very evident during each of these visits was the high rate of sales tax in Seattle and the high cost of gasoline. As you may or may not know, the state of Washington is one of nine states (along with Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, and Wyoming) that has no state income tax. Therefore, as discussed in more detail below, these states must generate revenues in other ways. In Seattle, the sales tax is 10.25%, of which 6% is state tax (compared to 4% in Georgia). In Washington State, gas prices were easily over $4 per gallon, while in Georgia, prices have remained under $3 per gallon. While the difference is not completely attributable to taxes, Washington gas excise taxes are at least $0.25/gallon higher than Georgia in Washington. So, there are clearly implications for us as consumers if state income tax is eliminated.
HIGH LEVEL COMPARISON OF GEORGIA & WASHINGTON
The bottom line, as we compare Georgia and Washington, is that both states need to generate revenues to support the key elements of their budgets. For Georgia, its annual budget is between $35Billion and $40Billion to primarily support education, health care, public safety, transportation, agriculture, and the operations of the state government. Currently, in Georgia, more than 50% of the revenue needed to cover those expenditures are covered by income taxes, with more than 80% of those income taxes coming from personal income tax, while the remaining comes from corporate income tax. By comparison, only approximately 23% of the state budget is covered by state sales tax. In Georgia, very limited property (mostly tied to automobiles) taxes are paid to the state.
In contrast, Washington generates 61% of its revenues from sales tax and 12% from property taxes. Most states without state income taxes generate most of their revenues from sales tax. Of the states who do not have a state income tax, Florida, Nevada, South Dakota, Tennessee, and Texas join Washington in generating 55% to 65% of their revenues from sales taxes. In addition, those states also generate 15% to 25% of their revenues on excise taxes, while Georgia’s excise taxes generate about 6% of their revenues. Excise taxes are indirect taxes levied on the manufacture, sale, or consumption of specific goods, services, and activities. Unlike general sales taxes, which are broadly applied at the final point of sale and typically itemized, excise taxes are typically included in the product’s price and collected earlier in the supply chain (e.g., from manufacturers or importers), making them less visible to the consumer. Excise taxes are often applied to things like fuel, tobacco, and alcohol.
MY CONCLUSION
So, if Georgia decides to eliminate its income tax, it is likely that the revenue will have to be made up by increasing the state sales tax and increasing excise taxes (e.g., gas tax). On its face, this sounds pretty good. If personal state income taxes are eliminated, for many Georgians, more than 5% of their income would go back in their pockets, giving them more to spend. This sounds very good for both individuals and businesses, as people would likely spend more. However, the big problem with replacing income tax with sales tax is that a disproportionate part of the tax burden will move to those who can least afford it, the lower and middle classes. While the more wealthy will prosper, income disparity will increase. Under the current system, state taxes are mostly fair, with all income brackets paying a total tax burden of approximately7-10%. Under a system which replaces income taxes with sales taxes, a large majority of Georgians will suffer, while a few will prosper. While eliminating the state income tax could potentially be a winner, it needs to be done in a way that is fair to all, but its alternatives are somewhat limited. I hope the legislature moves judiciously to do what is best for all Georgians and not just what sounds best in campaign commercials.
