Georgia Property Tax Reform Options, 2025

The Georgia Local Option Homestead Property Tax ExemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax.
Amendment, approved by nearly 63 percent of voters last November, risks creating a more administratively complex property tax system in the state and may disincentivize new entrants into the real estate market, as we’ve written elsewhere. However, one provision in H.B. 581 allowed local governments to opt out of the new exemption, which effectively functions as an assessment limit. Although the opt-out procedure was relatively complex and time-sensitive, many local governments chose to continue with the existing system. As a result, two parallel local taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.
systems may emerge in Georgia, undermining the principles of simplicity and neutrality by potentially influencing taxpayer behavior.

How Widespread Is Opting Out?

According to the data shared with the Tax Foundation by the Georgia Secretary of State’s office, 316 local government entities in the state decided to opt out of the new homestead exemption. Among them are 5 consolidated city-counties (63 percent of the respective group of local government entities), 47 counties (30 percent), 141 cities and towns (26 percent), and 123 public school districts (68 percent).

Importantly, the largest cities and counties are among those opting out. All five of the largest counties—Fulton, Gwinnett, Cobb, DeKalb, and Chatham—have school systems that opted out, with the general county governments in Gwinnett and Cobb also choosing to opt out. Similarly, all five of the largest cities, some of which operate as consolidated city-counties, opted out of H.B. 581.

About two-thirds of counties (64.8 percent), representing nearly 83 percent of Georgia’s population, saw their school system, general government, or both opt out. These counties tend to be larger and more economically significant to the state. A detailed map is presented below.

Opt-outs, which legislators initially considered a last-resort option under H.B. 581, became a widespread phenomenon. In response, legislators adopted—and the governor signed—H.B. 92, which, among other modifications, allows any local government that opted out of the homestead exemption to rescind its election by April 30, 2025, if the opt-out applied to tax year 2025, and provides some extra incentives for school systems to opt back in. While allowing greater flexibility and more time for local governments to deliberate their decision may be seen as a positive development, it is unlikely that many will choose to opt back in—given the high initial number of opt-outs and the strong involvement of local government associations.

Consequences for the Local Tax System in Georgia

H.B. 581, in addition to authorizing a statewide homestead exemption that would limit annual increases in residential net assessed values, also allowed for the imposition of a new local option sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.
of up to 1 percent for property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services.
relief. If all local governments had chosen not to opt out, the system could have remained relatively uniform—albeit more complex and less neutral than the previous system, as we have noted before. However, since a significant number of local governments—particularly the largest cities, counties, and school systems—chose to opt out, this raises the risk of creating two separate local tax systems in Georgia, with differing property tax rules and sales tax rates. This could lead to unintended behavioral responses, such as influencing where people choose to live or shop for groceries. Perhaps even more importantly, there is a significant potential issue with overlapping tax jurisdictions. Imagine someone living in Atlanta, where both the city and the school district opted out, while the county (e.g., Fulton County) decided to remain in the new system. As a result, property tax bills could become even more difficult to understand, and property tax liabilities could diverge drastically between residents of neighboring jurisdictions within just a few years.

The Path Forward

State legislators should consider adjusting the course initially planned under H.B. 581, as a significant share of local governments have opted out of the system, indicating broad discontent with the proposed changes. Since H.B. 92 is unlikely to result in many local governments transitioning back into the new system, policymakers may consider a broader, more comprehensive property tax reform that creates a uniform system with effective levy limits to prevent unauthorized increases in property tax revenues and, in most cases, property tax bills. This reform could also include changes to the sales tax system, which currently allows for a wide range of local sales tax rates, from 2 to 5 percent, to make it more uniform and disincentivize cross-border shopping even within Georgia’s borders.