One of the main reasons freelancers and solo founders choose Georgia is the 1% tax rate available for Individual Entrepreneurs. In 2026, this system is still in place — but only when it is used correctly.

Here is how the 1% tax actually works for Individual Entrepreneurs in practice.

Who can apply for the 1% tax

The 1% tax applies to Individual Entrepreneurs who receive Small Business Status. This structure is commonly used by freelancers, IT specialists, consultants, designers, marketers, and other service-based professionals.

Not all activities qualify automatically, which is why correct registration from the beginning is important.

How the 1% tax is calculated

The 1% tax is calculated on turnover, not profit. This means Individual Entrepreneurs pay 1% of their total income, regardless of expenses.

For service-based businesses with low operating costs, this system is simple and predictable.

Income limits you need to know

To keep the 1% tax rate, annual turnover must remain within the Small Business threshold. If this limit is exceeded, the tax treatment changes.

Understanding this limit helps Individual Entrepreneurs plan growth without unexpected tax increases.

What the 1% tax does and does not cover

The 1% tax covers income tax only. Other obligations, such as VAT registration, may still apply depending on activity type and turnover.

This is one of the most common misunderstandings among new Individual Entrepreneurs.

Why proper setup matters

Many issues appear when founders assume the 1% tax applies automatically. In reality, eligibility depends on activity classification, correct registration, and compliance.

At StartGE, we help Individual Entrepreneurs register properly, apply for Small Business Status, and understand how the 1% tax works in real life.

In 2026, the 1% tax remains one of Georgia’s strongest advantages for Individual Entrepreneurs — when it’s used the right way.