Georgia continues to position itself as a retirement-friendly state with a range of tax breaks for older adults, according to Grace Zhu, senior manager at RSM in Atlanta and a member of the American Institute of CPAs PFP Champions Task Force.
In an interview, Zhu explained how Georgia treats Social Security income, retirement account withdrawals, military pensions, property taxes and estate planning. She also detailed recent changes under the Georgia Economic Growth and Tax Relief Act.
Below is a transcript of the interview with Grace Zhu, edited for brevity and clarity.
Georgia’s flat income tax and recent tax changes
Robert Powell: Let’s start with the personal income tax situation for retirees in Georgia. What do folks need to know?
Grace Zhu: Georgia is a flat-tax system. It starts from federal adjusted gross income and then applies adjustments, exemptions and standard deductions.
Georgia recently passed House Bill 463, also known as the Georgia Economic Growth and Tax Relief Act. It lowered the tax rate from 5.19% in 2025 to 4.99% in 2026. It also allows additional annual reductions until the rate eventually reaches 3.99%.
The law increased the standard deduction to $15,000 for single filers and $30,000 for married couples filing jointly. It also increased the dependent exemption to $5,000 per dependent.
Georgia also partially conforms with federal provisions related to tip income and overtime pay exclusions.
Georgia offers generous 529 plan deductions. Grandparents contributing to a grandchild’s 529 plan may qualify for deductions of up to $4,000 per beneficiary for single filers and $8,000 per beneficiary for married couples filing jointly.
Unlike many states, Georgia allows contributions made by the tax filing deadline to count toward the prior tax year. Georgia also conforms with federal rules allowing up to $10,000 in 529 distributions for K-12 education and certain 529-to-Roth IRA rollovers if conditions are met.
How Georgia taxes Social Security and investments
Robert Powell: Many retirees have Social Security income. How is that taxed, if at all?
Grace Zhu: Georgia does not tax Social Security income. It’s tax-free.
Robert Powell: And if you’re an investor with capital gains, interest income or dividends, how is that taxed?
Grace Zhu: Georgia uses a flat tax rate, so there’s no special tax rate for investment income. It’s taxed at 4.99%.
Georgia does not tax U.S. government interest income or Georgia tax-exempt bond income. Capital gains are taxed at the same flat rate.
Georgia also conforms with the federal exclusion on the sale of a primary residence — $250,000 for single filers and up to $500,000 for married couples filing jointly.
For nonresidents selling Georgia real estate, there may be withholding requirements.
- Key Takeaways
Georgia does not tax Social Security incomeRetirees age 65 and older may exclude up to $65,000 in retirement income per person
Military retirees receive expanded deductions beginning in 2026
Many counties offer property tax breaks tied to age and income
Georgia has no estate tax, inheritance tax or gift tax
Source: Grace Zhu, RSM
Retirement account withdrawals and military pensions
Robert Powell: Many retirees may be taking distributions from IRAs, 401(k)s or 403(b)s. What do they need to know?
Grace Zhu: Georgia does tax retirement account withdrawals. But Georgia allows retirement income exclusions for seniors.
For seniors age 65 and older, there’s a $65,000 retirement income deduction per person. For seniors ages 62 to 64, the deduction is $35,000 per person.
Robert Powell: What about military veterans who may be receiving pensions?
Grace Zhu: Beginning in 2026, military retirees can receive a $65,000 military retirement income deduction regardless of age.
Before 2026, the deduction was lower and depended on age and earned income thresholds. The new law simplifies that and expands the benefit.
Sales taxes and property tax breaks for retirees
Robert Powell: Another tax retirees might worry about is the state sales tax.
Grace Zhu: Georgia has a 4% statewide sales tax, plus local sales taxes. Combined rates generally range from 6% to 9%.
Some counties have lower combined rates. Atlanta’s sales tax is 8.9%.
Food purchased for off-premises consumption is exempt from the 4% state sales tax. In some counties, that can significantly reduce the tax paid on groceries.
Robert Powell: What about property taxes?
Grace Zhu: Property taxes are assessed at 40% of fair market value, and homestead exemptions vary by locality.
For retirees age 62 and older, many jurisdictions exempt the school portion of property taxes. For those age 65 and older, there may also be additional exemptions depending on income levels.
Social Security and retirement income are excluded from some income calculations used to determine eligibility.
Robert Powell: In some places, the school portion of property taxes can make up more than half the bill, so that can be a meaningful tax break.
Grace Zhu: In my county, the school portion is about 62% of the property tax bill.
Estate taxes and why retirees consider Georgia
Robert Powell: What about estate taxes, inheritance taxes and gift taxes?
Grace Zhu: Georgia does not have an estate tax, inheritance tax or gift tax. That makes it attractive for retirees.
Robert Powell: And for people considering moving to Georgia in retirement, it’s probably wise to work with a financial professional to understand the full tax picture.
Grace Zhu: Absolutely. People should evaluate their own financial situation carefully.
Georgia not only offers generous tax benefits for retirees, but it also has mild winters, a strong economy and outdoor recreation opportunities. It’s a great place to live.
Robert Powell: Grace, thank you for sharing your knowledge with us.
Grace Zhu: My pleasure. Thank you.
