Gubernatorial Candidates Campaign On Phasing Out State Income Taxes

Congress is out for August recess and most state legislatures won’t be back in regular session until January, but reform-minded state lawmakers are already working on their legislative priorities for 2026. Take Georgia, where Lt. Governor Burt Jones (R), the leading contender to succeed Governor Brian Kemp (R), recently announced the formation of a state senate committee tasked with formulating a plan by the end of this year to phase out Georgia’s state income tax over time.

“Last year alone, nine states cut individual income taxes, and three others cut corporate income taxes,” Lt. Governor Jones said in his July 17 statement announcing the committee’s creation, adding that “among southeast states, only South Carolina has a higher income tax rate than Georgia. If we wish to remain the number one state for business and keep our state competitive, we must expand on the progress made over the past four years to eliminate Georgia’s income tax.”

Georgia lawmakers have had success in flattening and reducing the state income tax, with Georgia’s personal income tax now on track to fall below 5% by the time Governor Kemp leaves office, but it hasn’t kept pace with the rate reduction that lawmakers in neighboring and other competing states have enacted in recent years. The 6% top marginal rate that Georgia had before Governor Kemp started cutting and flattening the state income tax wasn’t regionally uncompetitive back when North Carolina had a progressive income tax code with a top rate of 7.75% and when South Carolina levied a top marginal rate of 7%. But times have changed.

Even when the state income tax drops to 4.99%, Georgia will still impose a higher income tax rate than North Carolina’s now 4.25% personal income tax, which is scheduled to fall to 3.99% at the end of 2025 and then as low as 2.49% by the end of this decade if annual revenue triggers are met. Meanwhile South Carolina, which had been a tax cut laggard for most of the past decade, is now poised to leapfrog Georgia, North Carolina, and many other states when it comes to income tax rate reduction.

Lt. Governor Jones noted that South Carolina is the only state in the region with a higher personal income tax rate than Georgia, but Palmetto State lawmakers are working to make it so that is no longer the case. This past spring, South Carolina House Speaker Murrell Smith (R), House Ways & Means Committee Chairman Bruce Bannister (R), and their colleagues passed legislation that will move South Carolina over the next five years from a progressive income tax code with rates of 3.5% and 6% to a 1.99% single rate income tax. The South Carolina Senate will take up that tax reform package in January and Governor Henry McMaster (R-S.C.) has urged legislators to send further income tax relief to his desk.

Should the South Carolina Senate pass a tax reform package next year that matches the 1.99% flat rate approved by the House, that would give South Carolina the nation’s lowest flat income tax. In a crowded field to be South Carolina’s next governor, meanwhile, nearly every GOP candidate running in the primary has declared that, like Burt Jones in Georgia, their top fiscal goal is elimination of the state income tax.

“When I’m Governor, we’re going to eliminate the state income tax,” said South Carolina Attorney General Alan Wilson (R), who is now running for governor. “Not only will it be the jet fuel we need to boost South Carolina to new economic heights, it’s also the right thing to do—putting more money back in South Carolina families’ pockets.”

Wilson’s commitment to eliminating South Carolina’s income tax has been echoed by by his fellow gubernatorial primary candidates, including Congresswoman Nancy Mace (R-S.C.) and Lt. Governor Pamela Evette (R-S.C.). As Wilson, Jones, and other leading state officials work to have their states join nearby Tennessee and Florida in the club of no-income-tax states, they’ll find they can strengthen their tax cutting capacity by growing state spending at a more modest clip moving forward, one in line with population growth plus inflation. In Georgia, for example, the state would’ve spent $2.5 billion less last year than it actually did had the state budget grown in line with population growth plus inflation over the past decade.

Meanwhile in South Carolina, the state would’ve spent $6.8 billion less last year than it actually did had lawmakers in Columbia grown state spending over the past decade in line with population growth plus inflation. Nationwide, had all 50 states grown their budgets in line with population growth plus inflation over the past decade, total state outlays in 2024 would’ve been $328 billion less than the $1.9 trillion that was actually spent. Put another way, the 50 state governments spent 20% more than they would have last year had spending grown in step with population growth plus inflation for the previous decade.

Members of the Georgia Tax Elimination Committee will hold their first monthly hearing on August 19 in Atlanta. Members of that bipartisan committee, which will be chaired by Senator Blake Tillery (R), include outgoing Senate President Pro Tempore John Kennedy (R), Senator Steve Gooch (R), Senator Greg Dolezal (R), incoming Senate President Pro Tempore Larry Walker (R), Senate Majority Leader Jason Anavitarte (R), Senator Chuck Hufstetler (R), Senator Sam Watson (R), Senators Ed Harbison (D), Senator Nan Orrock (D), and Michael Rhett (D).

Since 2019, nine states have moved from a progressive to a flat income tax, with Georgia being one of them. In the first half of this year alone, lawmakers in 12 states cut their income tax rate, with Georgia once again among them. In three states, meanwhile, governors signed legislation this year to phase out their income tax entirely in the coming years. Though Georgia wasn’t one of those three, Georgia could very well beat all of those states to zero income tax if Lt. Governor Jones’ committee is successful.