Does Georgia tax tips and overtime?

The federal deduction and the Georgia deduction are separate questions. Here is where Georgia actually lands, and why.

How Georgia builds its tax base

Georgia starts from your federal adjusted gross income. Both deductions are below-the-line — they reduce federal taxable income but leave AGI untouched — so neither reaches this state's return automatically. Anything you get here had to be legislated separately.

Tips in Georgia

Partly

Georgia Form 500 line 8 starts from federal AGI ("Do not use Federal taxable income"), so the below-the-line §224 deduction never flowed through; HB 1199 (2026) advanced conformity to the IRC as of Jan. 1, 2026 but expressly decoupled from IRC §224, and HB 463 (signed May 11, 2026) instead grants a Georgia-only exemption of up to $1,750 of cash tips from taxable net income for tax years 2026-2028 — no Georgia benefit at all for TY2025.

Source: Georgia Department of Revenue, Important Tax Updates — "2026 Income Tax Changes: Overtime and Tipped Wage Taxation" ("Georgia did not conform to the exemptions from income for overtime and tipped wages in the One Big Beautiful Bill Act. However, up to $1,750 of each may be exempted..."); corroborated by 2025 IT-511 booklet p.5 ("Georgia has not adopted the federal tax law changes in the federal One Big Beautiful Bill Act") · last reviewed August 24, 2026

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Overtime in Georgia

Partly

Same mechanism and same legislation: HB 1199 (2026) decoupled Georgia from IRC §225, and HB 463 (signed May 11, 2026) substitutes a Georgia-only exemption of up to $1,750 of qualified overtime compensation for tax years 2026-2028 (with separate W-2/1099 reporting of qualified overtime and cash tips to Georgia for TY2026-2028); nothing for TY2025, and the $1,750 cap is far below the federal $12,500/$25,000.

Source: Georgia Department of Revenue, Important Tax Updates — "2026 Income Tax Changes"; Gov. Kemp press release, May 11, 2026 (HB 463 "introduces temporary tax exclusions for qualified overtime compensation and cash tips through 2028") · last reviewed August 24, 2026

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Whatever your state does, your payroll taxes do not change

Both deductions reduce income tax only. Social Security and Medicare are still charged on the same wages, in every state.

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