Georgia Senate Bill 2 proposes tax exemption for employee tips

Georgia's Senate Bill 2, introduced on February 10, 2025, aims to reshape the state's income tax landscape by excluding tips from taxable income. Proposed by Senators Dolezal, Beach, Robertson, Gooch, Anavitarte, and others, the bill seeks to alleviate the tax burden on employees who rely on gratuities, particularly in the service industry.

The key provision of Senate Bill 2 amends the Official Code of Georgia Annotated to define tips as non-taxable income, provided they are reported and included in the employee's federal adjusted gross income. This change is expected to benefit a significant number of workers in sectors such as hospitality and food service, where tips constitute a substantial portion of earnings.

Supporters of the bill argue that exempting tips from state income tax will provide much-needed financial relief to low- and middle-income workers, potentially increasing their disposable income and stimulating local economies. However, the bill has sparked debates regarding its implications for state revenue. Critics express concerns that the exclusion of tips could lead to a significant decrease in tax income for the state, complicating budgetary allocations for essential services.

As the bill progresses through the legislative process, it may undergo amendments to address these concerns. Economic experts suggest that while the immediate impact on state revenue could be negative, the long-term benefits of increased spending by tipped workers could offset initial losses.

Senate Bill 2 represents a pivotal moment for Georgia's tax policy, with potential implications for both workers and the state's fiscal health. As discussions continue, stakeholders will be closely monitoring the bill's trajectory and its effects on the broader economic landscape.