At What Age Do You Stop Paying State Taxes in Georgia?
While no single age eliminates state taxes in Georgia, residents can access significant, age-based reductions that can lower their overall tax liability.
In Georgia, there is no specific age at which residents are completely exempt from paying all state taxes. The obligation to pay sales tax on purchases and other miscellaneous state taxes continues regardless of age. However, the state provides substantial tax relief for its senior residents, reducing their state income tax and property tax burdens once they reach certain age milestones. These benefits are primarily delivered through a retirement income exclusion and various homestead exemptions designed to make the state more affordable for retirees.
Georgia’s Retirement Income Exclusion
Georgia offers a state income tax benefit through its retirement income exclusion, with eligibility and amounts tied to a taxpayer’s age. For individuals between 62 and 64, up to $35,000 of retirement income per person can be excluded from state taxation. A married couple where both spouses are in this age range could exclude up to $70,000, though each spouse must qualify separately.
Once a taxpayer reaches age 65, the exclusion increases to a maximum of $65,000 per person, allowing a qualifying married couple to exclude up to $130,000. For those 65 and older, if a taxpayer has not reached their maximum retirement income exclusion, they can apply up to $5,000 of earned income toward the limit. The state defines “retirement income” broadly for this exclusion. It includes:
- Payments from pensions and annuities
- Distributions from IRAs and 401(k)s
- Capital gains
- Interest and dividends
- Net income from rental properties
Social Security benefits are not taxed by Georgia and are handled separately from this exclusion, so they do not count toward the excludable income limits.
Taxable Income for Georgia Seniors
Even with the substantial retirement income exclusion, seniors in Georgia may still have income that is subject to state tax. The most straightforward instance is when an individual’s retirement income exceeds the maximum allowable exclusion for their age group. For example, if a 66-year-old individual has $75,000 in pension and IRA distributions, the first $65,000 would be excluded, but the remaining $10,000 would be subject to tax.
Interest, dividend, and capital gains income will be taxed if it, combined with other retirement sources, surpasses the age-based limit. Wages from part-time or full-time employment are generally taxable, though the provision for those 65 and older allows up to $5,000 of earned income to be included in the retirement exclusion if the maximum has not been reached.
Senior Exemptions for Property Taxes
Beyond income tax relief, Georgia provides property tax exemptions for seniors, administered at the local county level. While all homeowners receive a standard homestead exemption, seniors may qualify for more. Homeowners 65 and older may be eligible for an additional exemption of $4,000 from county ad valorem taxes if their household income does not exceed $10,000 for the prior year. For this calculation, income from retirement sources and disability is excluded up to a certain limit.
For school taxes, individuals 62 and older may also be eligible for an exemption, with income limits and amounts varying by location. Property tax rules vary significantly by county, as local governments can provide more generous exemptions. These exemptions are not automatic and must be applied for with the county tax assessor’s office, where homeowners must prove their age and income. The property must be their primary residence.
How to Claim the Retirement Income Exclusion
Claiming the retirement income exclusion is a direct process integrated into the Georgia state income tax return, Form 500. The calculation and subtraction of this exclusion occur on Schedule 1, Adjustments to Income. Taxpayers must determine their total retirement income and apply the appropriate maximum exclusion amount based on their age.
This amount is then included in the total adjustments to income, which is subtracted from the federal adjusted gross income on the main Form 500, reducing the income subject to Georgia’s tax. For married couples where both spouses qualify, each must calculate their own exclusion based on their individual retirement income. Tax preparation software typically guides users through this calculation, automatically applying the correct exclusion.