The state of Georgia exempts up to $65,000 of retirement income per year from state income tax for taxpayers who are age 65 and older, according to Erwin and Branton, LLC. Retirement income from pensions and annuities, Social Security, interest and dividends, rental property and capital gains are eligible for exclusion from Georgia state income, according to Smith, Gambrel & Russell, LLP. Taxpayers between 62 and 65 and disabled persons can exclude the first $35,000 from state income tax.
Georgia was named one of the top 10 retiree-friendly states by Kiplinger magazine in 2015, according to PolitiFact. Georgia was scheduled to eliminate the cap on retirement income exclusions altogether in 2016, but state budget concerns resulted in the cap being permanently set at $65,000 per year. Married couples can exclude up to $130,000 per year.
Retirees can also exclude up to $4,000 of earned income from state taxation. PolitiFact reports that the Georgia state tax system disproportionately benefits wealthier retirees, since retirees with small or no pensions who must work to supplement their Social Security benefits pay more income tax than retirees who don't have to work.
Income tax forms and detailed guidelines for the retirement income exclusion are available online from the Georgia Department of Revenue at dor.georgia.gov.