Georgia HB 463 (2026–2028): How Savannah Workers Can Claim the New $1,750 Overtime & Cash Tips Georgia State Tax Break (and What Counts)

Georgia House Bill 463 (HB 463) creates a Georgia-only income tax break that can help a lot of Savannah-area workers—especially people who earn overtime and employees in tipped industries.

Beginning with tax year 2026 (the return most people will file in early 2027), HB 463 allows a Georgia income exclusion for:

Up to $1,750 of “qualified overtime compensation” (per year), and
Up to $1,750 of “cash tips” (per year),

for tax years 2026, 2027, and 2028, with both provisions sunsetting December 31, 2028. (gov.georgia.gov)

That means if you qualify for both categories, you could potentially reduce Georgia taxable income by as much as $3,500 per year.

Important: This is a Georgia state income tax change. It does not automatically change how you report income on your federal return.

Why HB 463 matters for Savannah tipped workers and overtime earners

Savannah has a large hospitality and service economy—restaurants, bars, hotels, event venues, salons, and tourism. Many workers in these jobs:

Pick up extra hours (overtime)
Receive a meaningful portion of earnings as tips (including cash tips)

HB 463 is designed to reduce Georgia taxable net income by excluding limited amounts of overtime and cash-tip income for a short window (2026–2028). (gov.georgia.gov)

The benefit in plain English: you may get two separate exclusions

HB 463 adds two separate items to Georgia’s computation of taxable net income:

Qualified overtime compensation exclusion (up to $1,750) for full-time employees paid by an hourly wage (2026–2028). (gov.georgia.gov)
Cash tips exclusion (up to $1,750) (2026–2028). (gov.georgia.gov)

Because these are separate, a worker who qualifies for both may exclude up to $3,500 in the same year.

What counts as “qualified overtime compensation” in Georgia HB 463

HB 463 ties Georgia’s definition to the federal tax code by referencing “qualified overtime compensation” as defined in Section 225 of the Internal Revenue Code, and it limits the exclusion to:

Up to $1,750 per year
Received by a full-time employee paid by an hourly wage
For tax years beginning on or after January 1, 2026 and ending on December 31, 2028 (gov.georgia.gov)

Practical takeaway for Savannah workers

If you earn overtime at an hourly job (restaurants, hotels, warehouses, healthcare, public safety, trades, etc.), you should:

Keep pay stubs that show overtime hours and overtime pay clearly.
Expect that Georgia may align “qualified overtime compensation” with a specific component of overtime pay based on how “qualified” is defined and how GA DOR administers the rule.

Also note: HB 463 includes a special rule for certain railway-related employers governed by the National Railway Labor Act. (gov.georgia.gov)

What counts as “cash tips” under HB 463 (and what doesn’t)

HB 463 defines cash tips with important limitations.

“Cash tips” generally include

HB 463 says “cash tips” means cash received by an individual in an occupation that customarily and regularly receives tips, including tips:

Paid in cash or charged (card), and
Tips received under a tip-sharing arrangement, but only if the tip is:
- Voluntary (no consequence if not paid)
- Not negotiated
- Determined by the payor (customer) (gov.georgia.gov)

Key limitation: you must be in a designated tipped occupation

HB 463 limits eligible tipped work by tying it to occupations that have been designated with a “Treasury Tipped Occupation Code” published by the U.S. Treasury in the Federal Register. (gov.georgia.gov)

What likely does NOT count

Based on the statute’s “voluntary” and “not negotiated” language, amounts that function like mandatory service charges are less likely to qualify as “cash tips” for this Georgia exclusion.

If you work banquets, catered events, large-party auto-gratuity environments, or any setting where charges are mandatory, you’ll want to review your pay breakdown carefully with a tax pro.

Who can qualify (Savannah-focused)

You are more likely to benefit if you are:

A Georgia taxpayer filing a Georgia individual return for tax year 2026, 2027, or 2028, and
You have either:
- Eligible overtime compensation (hourly, full-time employee), or
- Eligible cash tips in a designated tipped occupation, up to the $1,750 cap for each category (gov.georgia.gov)

Common Savannah-area examples:

Restaurant server, bartender, barback
Hotel front desk / bell staff / valet
Salon and spa service staff in a tipped role
Event and hospitality workers receiving voluntary tips
Hourly workers earning overtime in logistics, ports-related work, healthcare, construction, etc.

How to claim the HB 463 exclusions when filing your Georgia return

HB 463 is written as an exclusion in Georgia’s computation of taxable net income (i.e., part of how Georgia taxable income is determined). (gov.georgia.gov)

What to expect in real life

For most filers, claiming this will likely look like:

Following Georgia Department of Revenue instructions for the 2026 return (forms and line items may be updated for the new exclusions).
Using amounts supported by payroll reporting and your records.

Employer reporting requirements (important)

HB 463 requires employers to submit to the Georgia Department of Revenue, on forms prescribed by the Department:

Total qualified overtime compensation paid and number of employees (monthly/quarterly; 2026 allowed at year end) (gov.georgia.gov)
Total cash tips received by employees and number of employees (monthly/quarterly; 2026 allowed at year end) (gov.georgia.gov)

That employer reporting requirement is a big clue that:

Your ability to claim the exclusion may depend on how your employer tracks and reports those amounts.

How much can you actually save? (Quick estimate)

Your savings depend on Georgia’s tax rate in the year you claim the exclusion.

HB 463 also updates Georgia’s income tax rate language (and other provisions like deductions/exemptions) in the bill text. (gov.georgia.gov)

A simple way to think about the savings:

Tax savings ≈ Georgia tax rate × amount excluded

So, if you exclude the full $3,500 in a year, the state tax savings is typically on the order of a few hundred dollars (depending on the applicable rate and your situation).

Recordkeeping checklist (do this now, not later)

If you want to claim this cleanly for 2026–2028, start building a “proof file” now.

If you earn overtime

Save pay stubs showing overtime hours and overtime pay
Keep your year-end wage statement(s)
If you have multiple employers, keep records for each

If you receive cash tips

Keep a daily tip log (date, shift, cash tips, tip-outs)
Keep employer tip-report confirmations (if your employer collects tip declarations)
Keep any POS summaries that show charged tips vs. other amounts

Bottom line: the exclusion is valuable, but only if the income is properly tracked and supportable.

FAQs for Savannah workers

Does HB 463 change my federal taxes?

HB 463 is a Georgia law that changes Georgia taxable income computations. You should still expect to follow federal rules for reporting wages and tips on your federal return unless federal law changes separately.

Can I claim both the overtime and the cash tips exclusion?

Yes—HB 463 creates two separate exclusions (each capped at $1,750 per year) for 2026–2028. (gov.georgia.gov)

How long does the break last?

For taxable years beginning on or after January 1, 2026, through December 31, 2028, and then it sunsets. (gov.georgia.gov)

What tips count—credit card tips or only bills-and-coins cash?

The statute’s definition of “cash tips” is broader than just physical cash; it includes tips paid in cash or charged if they meet the “voluntary / not negotiated / determined by the payor” conditions, and it includes tips under tip-sharing—subject to the other requirements. (gov.georgia.gov)

What if my employer uses service charges, automatic gratuities, or banquet fees?

Because HB 463 requires the amount to be voluntary and customer-determined, these situations can get complicated. Bring your pay statements and tip documentation to a tax pro so the amounts can be categorized correctly under the law’s definitions. (gov.georgia.gov)

How Bottom Line Taxes can help Savannah workers maximize HB 463—correctly

If you work in Savannah or coastal Georgia and you earn overtime or tips, HB 463 may lower your Georgia tax bill for 2026–2028—but the details matter.

Bottom Line Taxes can help you:

Determine whether your overtime meets HB 463’s “qualified overtime compensation” requirements
Determine whether your tipped work aligns with HB 463’s “cash tips” and “tipped occupation” requirements
Build a clean documentation trail (pay stubs, tip logs, employer statements)
Prepare and file an accurate Georgia return that claims every dollar you’re entitled to—without creating problems later

For appointments and services, visit: https://bottomlinetaxesandwills.com

Disclaimer

This article is for general information only and is not legal or tax advice. Tax rules and Georgia Department of Revenue guidance can change. For advice about your specific situation, consult a qualified tax professional or the Georgia Department of Revenue.