Data Center Break Survives Georgia Income, Property Tax Push

Georgia lawmakers closed out their session by approving bills to cut personal income taxes, and provide scaled-back property tax relief for homeowners, while maintaining a lucrative tax break for data centers in the state.

The bills cleared the Republican-led legislature early Friday and now head to Gov. Brian Kemp (R), who previously vetoed an effort to claw back data center incentives in 2024.

“All legislation undergoes a thorough review process, and we will provide an update at the conclusion of that process,” Kemp’s office said in a statement Friday.

The tax measures reflect a smaller version of tax-cut promises Republican leaders made at the start of the session in January.

Initial proposals to eliminate homeowner property taxes were reduced after intense lobbying from local officials whose budgets rely on property tax revenue. And an original plan from a special committee to wipe out income taxes for two-thirds of Georgians fell short in discussions between the two chambers.

Lowering Rates

Instead, the income tax bill (HB 463) would reduce the current rate of 5.19% to 4.99% for 2026. Beginning in 2027, the bill would gradually reduce the rate by 0.125% each year until it reaches 3.99%.

The bill also would raise standard deductions from $24,000 to $30,000 for joint filers this year, increasing them by $750 every year starting in 2027 until they reach $36,000. The standard deduction increases and tax cuts would be delayed for a year if state revenue projections fail to grow by at least 3%.

The bill also would exempt up to $1,750 in cash tips and $1,750 in overtime income annually, echoing new federal tax breaks from President Donald Trump’s signature 2025 law.

To pay for the cuts, the Georgia bill would repeal several tax exemptions and credits. But the House declined to include the data center sales tax exemption on that list, killing a repeal effort (SB 410) led by Senate Rules Committee Chairman Matt Brass (R).

“It would’ve been nice to get it done,” Brass said. “But at the end of the day we still reduced our citizens’ income tax and gave them major protections against property tax increases; so all in all, still a very productive year.”

The data center industry has grown dramatically in Georgia in recent years and has increasingly clashed with local residents over energy and water concerns. The state now has more than 200 data centers—the fifth-most in the country, according to an online map of facilities. Without the exemptions, the state would have collected $474 million in sales tax revenue in 2025, according to a state audit published in December.

“The passage of this legislation would have discouraged future investment and signaled that Georgia is closed for business, eroding the state’s well-earned business reputation in the process,” said Khara Boender, director of state policy for the Data Center Coalition, an industry trade association.

The industry pays more than $1.8 billion in state and local taxes and supports more than 176,000 jobs across the state, Boender added.

Last-Minute Changes

The property tax reform measure (SB 33) would allow local governments to expand property tax exemptions for primary residences with a new 1% local sales tax.

The bill bounced back and forth between the chambers as the session deadline approached.

The Senate scrapped a provision that would have limited the growth of revenue collected from property tax to 3% annually or the rate of inflation, whichever is greater. But lawmakers left in a cap on the growth of individual property tax assessments to 3% or the rate of inflation, Brass, who chairs the Senate Rules Committee, told lawmakers Thursday.

After Senate lawmakers rejected the original property tax bill (HB 1116), they used a procedural tactic to move a slimmed-down version into a bill that originally targeted hemp products and passed it 32-21. The House approved those changes 97-72. The updated bill text is not yet available.