In his final year in office, Gov. Sonny Perdue finally was able to fulfill one of his major campaign promises Wednesday when he signed legislation eliminating retirement state income taxes on middle-income and wealthy retirees.
Perdue has called for the end of taxes on non-work income for retirees for years. He said it will help allow Georgia to compete with states like Florida – which has no state income tax – for retirees looking to relocate.
During his first year in office, lawmakers approved a bill eliminating income taxes on retirement income up to $35,000 per year per person, or $70,000 per couple. With social security, couples can earn up to about $100,000 without paying state income taxes.
The new law Perdue signed Wednesday does away with retirement income taxes on all income above that level. Seniors would still be taxed on most income they receive from working.
The latest change will save middle- and upper-income retirees, and cost the state, about $150 million when fully implemented. The phase-out of the tax would begin in 2012.
The retiree tax break was added on to legislation that levies a new tax on hospitals and increases state fees by $90 million to help balance the state budget. The new law also eliminates the .25 of a mill state property tax.
“Signing this bill ensures a balanced budget and lays the groundwork for economic recovery,” Perdue said. “We are creating an environment that encourages seniors to spend their retirement years and dollars in Georgia.”