Fuel tax break drains Georgia revenue collections
By Kim Jarrett | The Center Square
(The Center Square) – Georgia’s fuel tax collections in May were $196.6 million lower when compared to last year, in part because of a two-month fuel tax suspension approved by state lawmakers and second-term Republican Gov. Brian Kemp.
Overall state tax collections were down 12.6% from May 2025, totaling $339.1 million, as other tax collections also declined, according to information from Kemp’s office.
Individual income tax collections decreased by $97.7 million. Corporate income tax revenue dropped by $60.5 million, a 50% decline. The state also experienced a $1 million decline in tag, tax and title fee collections and $4.6 million less in title ad valorem tax collections.
Sales taxes were up by 7.4%, or $117.9 million, when compared to last year.
Net tax revenue collections are up year-to-date when compared to last year by $344.6 million and are at $30.8 billion for the 2026 fiscal year, according to the governor’s office. May is the 11th month of Georgia’s fiscal year, which runs from July 1 to June 30.
Gov. Brian Kemp extended the fuel tax suspension for two additional weeks after it expired on May 20, citing a state of emergency amid soaring gas prices due to the conflict in Iran. He is asking state lawmakers to approve the extension when they meet in a special session on June 17.
Motor fuel tax funds transportation projects in Georgia. The money to replace the lost revenue will come from the state surplus, according to the governor’s office.
Georgia’s budget is already lean. Kemp slashed $344 million from it after lawmakers approved a drop in the state’s income tax.
An analysis by the Georgia Budget and Policy Institute shows the state had about $15 billion in reserves when the legislative session started, according to the report. It was split between the Revenue Shortfall Reserve, which had about $6 billion, and undesignated overflow at $9 million. Lawmakers approved $6.2 billion through mid-year budget adjustments.
The gas tax suspension, tax rebates and $4 billion of infrastructure projects will decrease reserves from $15 billion to $9 billion, according to the report.
State officials will know where the surplus stands after the final accounting of general fund revenue at the end of the fiscal year, a spokesman for the governor’s office said.
Kemp warned lawmakers that the state is still short of revenues to meet the fiscal year 2027 budget.
“When I introduced my balanced budget recommendation in January, it was based on a general fund revenue estimate of $36.6 billion,” Kemp said as he signed the budget. “With the tax cuts the General Assembly passed, and I signed into law yesterday, the state must now address a reduction in revenue for this coming fiscal year of nearly $1 billion, and that’s assuming we don’t have an economic downturn.”