Atlanta, January 16, 2026 — Gov. Brian Kemp rolled out an expansive agenda Thursday at the Georgia State Capitol, calling for billions in tax relief and new spending that would tap deeply into the state's bulging reserves while putting money directly into the pockets of teachers, state workers and college students.
In his final State of the State address, the Republican governor proposed cutting the state income tax rate, issuing another round of rebates to taxpayers, doubling bonuses for state employees and launching Georgia's first need-based scholarship program — a move that drew rare bipartisan applause in a deeply divided political climate.
“Georgia families deserve to keep more of what they earn,” Kemp told lawmakers packed into the House chamber. The proposals, he said, reflect the state's fiscal strength and his administration's commitment to returning surplus revenue to taxpayers.
The centerpiece of Kemp's tax agenda is a reduction in the state's flat income tax rate from 5.39% to 5.19%, a 20-basis-point cut that would save taxpayers an estimated $7.5 billion over the next decade. The reduction would apply to income earned in 2025, part of the state's multiyear march toward an eventual target rate of 4.99%.
The immediate impact would be more modest — the state would forgo about $149 million in revenue for the budget year ending June 30, then $744 million annually thereafter. Still, combined with previous tax rebates, suspended gas taxes and homeowner relief grants, Kemp said his administration has committed more than $7.6 billion in taxpayer savings.
Kemp also wants to send out a fourth round of one-time tax rebates totaling $1.17 billion. Single filers would receive $250, heads of household $375, and married couples filing jointly $500. To qualify, taxpayers must have filed both 2024 and 2025 returns, paid state taxes and owe nothing to the Department of Revenue.
State employees, including teachers and public safety officers, would see one-time bonuses of $2,000 under Kemp's proposal — double last year's $1,000 payment. The $611 million plan allocates $369 million specifically for K-12 educators, administrators, custodians, cafeteria workers, school nurses and bus drivers.
The boldest move may be Kemp's push for the DREAMS Scholarship, a $325 million need-based program that would mark a significant departure for a state that has long tied financial aid to academic performance through the HOPE Scholarship. Democrats have sought need-based aid for years, and the announcement drew standing ovations from both sides of the aisle.
Under the proposal, eligible students attending public universities or technical colleges in Georgia would receive $3,000 annually starting in the 2026-27 academic year. To qualify, students must be Georgia residents, enroll at least half-time in degree programs and demonstrate unmet financial need on federal aid applications.
The state hopes private donors will eventually contribute $1.5 billion to supplement the one-time public endowment, creating a sustainable funding model for future students.
All of this ambition comes with a price tag. Kemp's proposals would draw down roughly $4 billion from Georgia's $16.4 billion reserve fund, though the rainy day account would still hold more than $10 billion after the spending spree.
Whether lawmakers will embrace the full package remains uncertain. The General Assembly must approve all budget measures, and while Kemp's tax-cutting credentials appeal to conservatives, some fiscal hawks may balk at depleting reserves so aggressively in an uncertain economic climate.
For now, the governor is betting that Georgia's financial cushion is thick enough to sustain bold investments — and that voters will remember who put money back in their wallets come election time.
