House Bill (HB) 1199 is now law following approval by Georgia lawmakers and the Governor’s signature on March 20, 2026. The bill provides updates to Georgia’s income tax code in alignment with the federal Internal Revenue Code and includes several provisions that may affect businesses, workers and consumers across the state. It also authorizes a temporary suspension of Georgia’s motor fuel tax, providing immediate relief at the gas pump.
Sponsored by Representative John Carson and carried in the Senate by Chuck Hufstetler, HB 1199 continues Georgia’s established approach to selectively conforming to federal tax changes while maintaining certain state-specific differences.
How Georgia’s Annual Tax Conformity Works
Each year, Georgia adopts a conformity bill to determine which federal tax provisions will apply for state income tax purposes. This year’s legislation aligns Georgia’s tax code with federal tax law as of January 1, 2026, while continuing to carve out certain exceptions within the state.
The primary focus of the 2026 conformity legislation centers on how Georgia responds to provisions included in H.R. 1, widely known as the One Big Beautiful Act (OBBB). As in prior years, the state has chosen to conform to certain federal changes while opting out of others.
Key Tax Provisions Included in HB 1199
The bill includes several tax policy decisions that may be particularly relevant for individual taxpayers and businesses:
- Tips and overtime income: Georgia will not adopt the new federal exclusions for income earned from tips and overtime pay. Separate legislation proposing partial exemptions for this income did not advance prior to Crossover Day, the deadline for which bills must pass at least one chamber to remain eligible for consideration during the legislative session, though lawmakers could revisit these concepts later in the session by adding them to other tax bills that have advanced.
- Auto loan interest: The state will decouple from the federal deduction for interest paid on auto loans, meaning the deduction will not be available for Georgia income tax purposes even if it applies federally.
Research and development expenses: Georgia will continue following pre‑2017 federal rules related to research and experimental costs, allowing certain expenses to be deducted in the year they are incurred rather than over the course of multiple years - Foreign income: The legislation maintains Georgia’s long-standing position of exempting certain foreign income from state taxation. Georgia will continue to decouple from federal rules that would otherwise subject certain foreign subsidiary income to state tax, consistent with its prior exclusion of GILTI, or Global Intangible Low-Taxed Income.
- Section 179 deductions: Georgia will conform to the increased federal maximum Section 179 deduction, allowing businesses to immediately expense more qualifying equipment purchases, while continuing to exclude real property from eligibility.
Temporary Motor Fuel Tax Suspension
In addition to these tax conformity updates, HB 1199 authorizes a 60-day suspension of Georgia’s motor fuel excise tax, effective upon the governor’s signature on March 20th, 2026. As fuel distributors and retailers receive new inventory, drivers should immediately begin seeing lower prices at the pump.
Georgia’s excise tax currently stands at 33.3 cents per gallon for gasoline and 37.3 cents per gallon for diesel. State leaders estimate the temporary suspension will result in nearly $400 million in savings for consumers and businesses over the two-month period.
What This Means for Georgia Taxpayers
House Bill 1199 reflects Georgia’s continued effort to balance stability in its tax code with targeted policy decisions that reflect state priorities. The conformity updates provide important guidance for tax compliance and planning, while the gas tax suspension offers immediate relief amid ongoing cost pressures.
Windham Brannon remains engaged in tracking these legislative developments and their practical implications as implementation unfolds. Taxpayers with questions about how this legislation may apply to their specific circumstances are encouraged to reach out to Tim Clancy or contact their Windham Brannon advisor for additional guidance.
