The Truth About Georgia’s Retirement Taxes

Retirement in Georgia can be just peachy with these retirement guidelines

When planning retirement in Georgia, consider how the state taxes pensions and other retirement income. A big benefit for retirees in Georgia is that social security benefits are exempt from income tax.

By Grace Zhu, CPA, PFS, MST, AEP, TEP

Georgia offers plenty of generous local and state tax benefits geared toward seniors and retirees. Be sure to take time to research how your retirement will be impacted by these tax laws.

Personal income tax for retirees in Georgia

House Bill 463, also known as the Georgia Economic Growth and Tax Relief Act of 2026, is the primary tax legislation passed in April 2026. It lowered the flat tax rate from 5.19% in 2025 to 4.99% for 2026. It also allows for future annual reductions of 0.125% beginning in 2027 until the rate reaches 3.99%.

The bill made some significant changes to exemption rules that would likely result in tax savings. For example, the dependent allowance increased from $4,000 per child to $5,000, and the standard deduction increased to $15,000 for single filers and $30,000 for married couples filing jointly. Georgia also allows an “unborn dependent” exemption of $5,000. It applies to an unborn child with a detectable human heartbeat, as defined under Georgia law.

While for federal tax purposes a taxpayer can exclude up to $25,000 for tips and $12,500 for overtime income, Georgia did not fully conform with the federal exemption for tips and overtime income. The new tax bill allows Georgia residents to exclude up to $1,750 of qualified tips and $1,750 of overtime pay from Georgia taxable income from 2026 through 2028.

For retirees, the question of how Social Security and Medicare benefits are taxed is, and should be, top of mind. Social Security and Medicare benefits are not subject to Georgia state income tax, an important fact that allows retirees in Georgia to enjoy more of their benefits. If you’re retiring with a pension, your pension income will be taxed at the flat rate, although a pension income deduction of up to $35,000 for those ages 62 to 64, and up to $65,000 for those 65 and older, is allowed.

If you’re an investor, there are no special tax treatments available for investment income, including interest, dividends, and capital gains, all of which are subject to the state’s 4.99% flat tax. Georgia follows the federal rule for capital gains, which allows an exclusion of up to $250,000 for single filers and $500,000 for married filers on the sale of a primary residence. Nonresidents are subject to a withholding requirement on the sale of real estate.

Get a deduction for funding higher education

While not all states offer tax advantages for 529 college savings plan contributions, Georgia is generous in this regard.

Georgia uses the Path2College 529 plan, through which taxpayers can make tax-deductible contributions of up to $4,000 a year per beneficiary for single filers and $8,000 per year per beneficiary for joint filers. On the federal level, contributions are not deductible, although no income taxes are due on account earnings. When money is withdrawn to pay for qualified educational expenses, no federal taxes are due on those withdrawals. Georgia follows the federal rule allowing up to $10,000 per beneficiary annually for qualified K-12 private education expenses.

Another advantage of Georgia-based 529 accounts is that, unlike in many other states where contributions must be made by the end of the calendar year, Georgia allows contributions made up to the tax filing deadline in April of the following year to count toward the prior tax year.

All 529 accounts can be rolled over to a Roth IRA under specific circumstances, such as when the beneficiary chooses not to attend college or there is money left over after graduation. Georgia also treats 529 plan rollovers to Roth IRAs as qualified withdrawals for Georgia residents.

State sales tax

Georgia’s state sales tax is 4%, and the combined state and local sales tax ranges from 6% to 9%. Food and food ingredients sold for off-premises consumption are exempt from state sales tax and subject only to local taxes. Cobb and Gwinnett counties have the lowest sales tax rate at 6%, while Atlanta’s sales tax rate is 8.9%.

When it’s time to start your retirement withdrawals, take advantage of these deductions

In Georgia, distributions from retirement accounts such as 401(k)s, 403(b)s, and IRAs are subject to state income tax. However, retirees in the state benefit from a pension and retirement distribution deduction of up to $65,000 per person for those 65 and older, and $35,000 per person for those ages 62 to 64.

The state also allows a military retirement exclusion for retired service members. For 2025, taxpayers under age 62 can take a military retirement adjustment of $17,500 on their state tax return, or a $35,000 adjustment if they also have earned income of at least $17,500. Those ages 62 to 65 can exclude up to $35,000 of military retirement income, while those older than 65 can exclude up to $65,000.

Effective in 2026, the military retirement exclusion becomes a flat $65,000 without an age limitation. Active combat zone pay and VA disability payments are exempt from both federal and Georgia taxes.

Property and estate tax benefits for seniors

Property taxes in Georgia are assessed at the local level, with assessed values set at 40% of fair market value and an average effective rate of approximately 1%. Homestead exemptions may be available depending on the county. Taxpayers who reach age 62 before Jan. 1 are exempt from paying the school tax portion of their property taxes. Those who reach age 65 before Jan. 1 may qualify for an additional $4,000 exemption from all county ad valorem taxes if the income of that person and spouse was less than $10,000 in the preceding tax year. Income from retirement sources and Social Security is excluded when calculating the $10,000 limit.

Georgia also does not impose a state estate tax, inheritance tax, or gift tax.

Planning for retirement is no small task, no matter which state you settle in. Having a financial professional in your corner is an asset for all your financial and retirement goals. You can find a licensed professional here . To find a licensed professional in Georgia, click here .

About the author

Grace Zhu, CPA, PFS, MST, AEP, TEP, is senior manager – Global Family Enterprise at RSM US LLP in Atlanta, GA. She is also a member of the American Institute of CPA’s (AICPA)’s PFP Champions task force.