Georgia Retirement Income Exclusion: How Retirees Are Taxed

Retirees comparing states usually start with the ones that have no income tax at all. Georgia is not on that list, but for many retirees the difference is smaller than it looks, and for some it is zero. The Georgia retirement income exclusion lets each taxpayer 65 or older shield $65,000 of retirement income from state tax every year, and Social Security is exempt entirely. A married couple with $130,000 of pension, IRA, and investment income plus Social Security can owe no Georgia income tax.

The exclusion is generous, but the details matter: what counts as retirement income, how the age thresholds work, how the exclusion interacts with Roth conversions and capital gains, and what else Georgia taxes that other states might not. This guide explains how retirees are taxed in Georgia for 2026 and how to plan around the rules. It is educational, not individualized advice, and it is written for residents and for those considering a move.

How the Georgia Retirement Income Exclusion Works

Georgia allows taxpayers who are 62 or older, or permanently and totally disabled at any age, to exclude a fixed amount of retirement income from state taxable income. From age 62 through 64 the maximum exclusion is $35,000. At 65 and older it rises to $65,000. The amounts have been in place for years and are not indexed for inflation. The Georgia Department of Revenue explains the rules on its retirement income exclusion page.

The exclusion is per person, not per return. On a joint return, each spouse calculates the exclusion separately based on that spouse's own age and that spouse's own retirement income. A 66-year-old husband with $80,000 of IRA withdrawals and a 63-year-old wife with $20,000 of pension income exclude $65,000 and $20,000 respectively, not $85,000 combined. Income that belongs to one spouse cannot be shifted to use the other's unused exclusion, which makes account titling and withdrawal sourcing a planning point for couples.

The exclusion is claimed on Schedule 1 of Georgia Form 500. It reduces Georgia adjusted gross income before the state's personal exemption and dependent allowances are applied.

What Counts as Retirement Income in Georgia

The definition is broader than the name suggests. It is not limited to pensions.

• Pension and annuity payments, including from employer plans, military retirement, and purchased annuities.
• Distributions from IRAs, 401(k)s, 403(b)s, 457 plans, and similar accounts, including Roth conversion income.
• Interest and dividends from any source.
• Net capital gains, including gains from selling stocks, funds, and real estate.
• Net rental income and royalties.
• Up to $4,000 of earned income from wages or self-employment per person.

The $4,000 earned income limit

The earned income cap is the one part of the definition that catches people. A 66-year-old physician working two days a week and earning $120,000 can include only $4,000 of that in the exclusion. The rest is fully taxable in Georgia. The exclusion is designed for people who have largely stopped working, and a retiree with substantial wages will fill the exclusion mainly with investment and retirement account income instead.

Social Security is excluded separately

Georgia does not tax Social Security or Railroad Retirement benefits at all, regardless of age or income. The federal government may tax up to 85 percent of benefits depending on your other income, as the IRS explains in Topic 423, but that taxable portion is subtracted back out on the Georgia return. This exemption is in addition to the retirement income exclusion, not part of it.

Georgia Income Tax Rates and Deductions for Retirees

Georgia moved to a flat income tax in 2024. The rate was 5.39 percent for 2024 and 5.19 percent for 2025, and state law schedules further reductions of one tenth of a percentage point per year toward 4.99 percent as long as revenue targets are met. For 2026 the rate is a little over 5 percent, and the Department of Revenue publishes the exact figure for each year on its individual income tax pages.

In place of a traditional standard deduction, Georgia provides a personal exemption of $12,000 for single filers and $24,000 for married couples filing jointly, plus an allowance for each dependent. Georgia does not allow itemized deductions unless you itemize federally, and even then the state has its own adjustments.

Put the pieces together for a married couple, both 67, with $60,000 of combined Social Security, $70,000 of IRA withdrawals split evenly, and $20,000 of dividends split evenly. Social Security is exempt. Each spouse has $45,000 of retirement income, well under the $65,000 exclusion. Georgia taxable income is zero. Raise the IRA withdrawals to $150,000 and each spouse has $85,000 of retirement income, or $20,000 over the exclusion. The $40,000 excess minus the $24,000 personal exemption leaves $16,000 taxable and a state bill of roughly $800. Georgia tax only begins once non-Social Security income exceeds about $77,000 per person at 65 or older on a joint return.

Planning Around the Exclusion

Because the exclusion is a fixed annual amount, it rewards spreading income across years and across spouses rather than bunching it.

Roth conversions after 65

Roth conversion income is an IRA distribution for Georgia purposes and counts toward the exclusion. A retiree who is 65 with modest other income can convert up to the unused exclusion each year and pay federal tax but no Georgia tax on the conversion. That changes the math in our Roth conversion guide for Georgia residents: the state cost of converting between 65 and the start of required distributions can be zero, which is roughly a 5 percent discount compared with converting while working.

Capital gains harvesting

Net capital gains are retirement income, so gains harvested at the federal 0 percent rate can also be excluded from Georgia tax if they fit within the exclusion. For most states, the state tax is the main cost of gain harvesting. In Georgia, a retiree over 65 with room in the exclusion can realize gains with no tax at either level.

Balancing income between spouses

Since each spouse has a separate exclusion, couples should try to draw retirement income from both spouses' accounts rather than one. A couple where all retirement savings sit in one spouse's IRA will waste the other spouse's exclusion every year. Rolling a portion of a 401(k) into a spousal account is not possible during life, but withdrawal sourcing, the titling of taxable investment accounts, and the choice of which spouse converts to Roth can all be arranged to use both exclusions. This is easiest to fix in the years before retirement, which is one reason our retirement planning service looks at account ownership by spouse well before withdrawals begin.

The 62 to 64 window

The $35,000 exclusion from 62 through 64 is smaller but still meaningful for early retirees. Combined with the federal 0 percent capital gains bracket and the lower federal brackets available before Social Security and required distributions begin, these years are often the most tax-efficient of a retiree's life. Withdrawals, conversions, and gains should be sized to the exclusion in each year rather than deferred to 65 by default.

Other Georgia Taxes That Affect Retirees

Income tax is only part of the picture. Georgia's other taxes are generally favorable to retirees, with some local variation.

• Georgia has no estate tax and no inheritance tax. The federal estate tax is the only one that applies, and only to estates above the federal exemption.
• Property tax is assessed at 40 percent of fair market value and then taxed at county and school district millage rates. Every county offers a homestead exemption, and most metro Atlanta counties offer additional exemptions for residents 62 or 65 and older, some of which eliminate school taxes entirely or are subject to income limits. The Department of Revenue summarizes the options on its homestead exemptions page, but the county tax commissioner has the specifics.
• Sales tax is 4 percent at the state level plus local additions that bring metro Atlanta rates to roughly 8 to 9 percent. Groceries are exempt from the state portion but not from local portions.
• Georgia does not tax military retirement income for retirees under 62 up to a separate exclusion, and at 62 the general retirement income exclusion applies.
• Vehicles are subject to a one-time title ad valorem tax at purchase rather than an annual property tax, which is a modest advantage for retirees who keep cars for a long time.

Moving to Georgia or Leaving It

Part-year residents prorate the exclusion based on the portion of the year they were Georgia residents and the retirement income earned during that period. Retirees relocating from a state with no income tax should time large withdrawals or conversions with the move in mind, since income received before establishing Georgia residency is not Georgia income.

Georgia also does not tax pension or retirement plan income for nonresidents, in line with federal law that prevents states from taxing retirement income of former residents. A retiree who earned a pension in Georgia and moves to Florida owes Georgia nothing on it. The reverse is also true: a retiree moving to Georgia with a pension from New York or California pays only Georgia tax on it, subject to the exclusion.

For a broader look at the cost of retiring in the metro area, including housing, healthcare access, and neighborhoods, see our guide to retiring in Atlanta. For the state's income tax structure for working residents, including how it treats federal changes, see what Georgia residents should know about taxes.

Georgia is not a no-income-tax state, but for retirees it often functions like one. The retirement income exclusion, the full exemption of Social Security, the flat rate that keeps stepping down, and the absence of any estate tax add up to a light tax burden for most households once they reach 65, and a manageable one from 62. The planning opportunity lies in using the exclusion deliberately: drawing income from both spouses, converting to Roth or harvesting gains inside the excluded amount, and timing withdrawals across the 62 to 64 window and beyond. That is work we do routinely for the retirees and pre-retirees we serve across metro Atlanta.

Tony Colunga · Founder, Attend Wealth

Tony leads Attend Wealth, a fee-based wealth management firm in Atlanta serving professionals, families, physicians, and business owners. Advisory services are held to a fiduciary standard. More about Attend