For the past 12 years, Area Development Magazine has ranked Georgia the No. 1 state for business.
Now economic developers in the state are concerned that Georgia’s business-friendly reputation could be at stake after the General Assembly eliminated about a dozen tax incentives and tax credits used to attract investment to the state.
Among the eliminated tax credits and incentives included those for corporate headquarters and expansions; tax credits for alternative fuel, low-emission and zero-emission vehicles; tax credits for medical equipment and supplies; sales tax exemptions for machinery, equipment or materials in the construction and operation of a clean room (most often used for pharmaceutical research and development); as well as sales tax exemptions for machinery and equipment used to reduce or eliminate air or water pollution.
Other incentives cut included money for reforestation, land conservation, historic building restoration, the arts and live performances and short-line railroads, according to Capitol Beat.
Gov. Brian Kemp approved the elimination of those incentives to fill a $1 million gap in the budget created by the reduction in the state income tax rate from 5.19 percent to 4.99 percent. That tax rate will be reduced by .125 each year until it reaches 3.99 percent.
Tax policy is complicated and highly charged. That includes tax credits and incentives.
Even economic developers agree that some credits and incentives should sunset.
But several people interviewed expressed concern that some of the eliminated credits and incentives will hurt the state’s ability to attract new investment to Georgia.
“We are competing with states that have a much more aggressive incentive packages than we do,” said Grant Cagle, president and CEO of the Georgia Economic Developers Association. “We don’t want there to be a trend of taking away tools in our already limited tool chest.”
What was particularly problematic was that the legislation eliminated tax credits and incentives retroactively to Jan. 1, 2026. That means companies may have made investment decisions based on getting those tax breaks.
“We are the No. 1 state for business, not because we have the most aggressive incentive policies,” Cagle said. “We are the No. 1 state for business because our state leaders have been consistent. Companies know that when they are dealing with Georgia, our state leaders have been consistent.”
Chris Clark, president and CEO of the Georgia Chamber of Commerce, shared his concerns about the elimination of the incentives and credits during the May 20 quarterly board meeting of the Georgia Research Alliance.
“The General Assembly eliminated a dozen tax incentives in the final hours of the legislative session,” Clark said. “Some of those credits had likely outlived their usefulness and deserved review. Others, however, remain active and important tools in Georgia’s economic development strategy.”
Clark explained that those tools included tax incentives and credits tied to clean technology, pharmaceuticals, corporate headquarters and port activity, all of which are critical to Georgia’s competitiveness and job growth.
“These are not abstract policy tools,” Clark said. “They are part of real recruitment and retention conversations happening every day with companies considering where to invest, expand and create jobs.”
Clark also expressed concern that the overnight nature of the decision to eliminate incentives would send a negative signal to business prospects.
“Businesses depend on consistency and predictability in tax and economic policy,” Clark said. “Major investment decisions are often made years in advance and are modeled around existing incentives and long-term financial assumptions. When the state abruptly changes course or removes those tools without a broader strategic framework, it creates uncertainty and sends the wrong message to employers and investors.”
The 2026 legislative session occurred in the middle of a pivotal election year. Reducing taxes on Georgians became a rallying cry among key legislators.
Blake Tillery, chairman of the Georgia Senate Appropriations Committee, initially proposed in January legislation to eliminate 29 tax incentives. Tillery announced last October that he was running to be the Republican nominee for Lt. Governor. In the May 19th primary and came in third.
“We have been the No. 1 state to do business for 12 years,” Tillery said in a telephone interview. “We have done that by giving corporations a break on the taxes they would have to pay. I think businesses have had their decade. It’s time for people to have theirs.”
Tillery said that by reducing the state’s income tax, taxes would be reduced for many small businesses, and they create the most jobs.
“Yes, we may land one less Fortune 500 company,” Tillery said. “But in the process, we are reducing taxes on all the small businesses and hardworking individual families. I will take that trade. I love being No. 1 for business, but not at the expense of families footing the bill for corporations.”
Georgia has wrestled with the issue of tax incentives and tax credits for years. Back in 2010, the Special Council on Tax Reform and Fairness for Georgians proposed an overhaul of Georgia’s tax code. The late A.D. Frazier chaired the special council, and he told the Buckhead Rotary Club in April 2011 that lobbyists killed the “revenue-neutral” recommendations in the 34-page report that called for income tax reductions by increasing state sales taxes.
Since then, several tax credits and incentives have been debated and have survived scrutiny, including tax credits for Georgia’s movie and television productions.
Tax incentives and credits to build data centers also survived, which Tillery described as unfortunate. Data centers are highly controversial because they are energy and water hogs. But backers of data centers had the political muscle to protect their incentives worth $1.5 billion in state funds and $1.3 billion from local governments.
“Corporate tax credits alone are not the reason why we’ve been number one to do business for 12 years,” said Tillery, citing many other factors. But Tillery is okay with Georgia losing those bragging rights as long as everyday Georgians can pay less in income taxes. States with no or reduced income taxes usually have to pay higher property and sales taxes, which often places a heavier burden on their lower-income residents.
(For example: Democratic gubernatorial candidate Michael Thurmond proposed cutting the state sales tax in half, calling it the most regressive tax in the state. Thurmond came in third in the primary, which Keisha Lance Bottoms won outright to become the Democratic nominee for governor.)
For Chris Clark, who has served as president of the Georgia Chamber since 2010, it’s about living up to the state’s commitment as a business-friendly state.
“Georgia has built its reputation on stability, competitiveness and a pro-growth business climate,” Clark said. “Preserving that reputation matters just as much as any individual incentive itself.”
