The Republican-backed plan, which passed 43-7 in the Senate, would also give a tax break to businesses that hire jobless workers who are either collecting unemployment benefits or who have been out of work for 60 days or more.
State Senate Majority Leader Chip Rogers said the legislation, which has already passed the House, would be "pivotal in turning around our state's economy."
"We believe Georgia will now be the state that other states look for how you start a recovery," the Republican from Woodstock said.
But state Sen. Nan Orrock said the tax cuts would cost the state far more in lost revenue than they would deliver in jobs.
"We're in a budget climate where we're already slashing and burning," the Atlanta Democrat said. "This is making fiscal policy willy-nilly."
The version that passed the House didn't contain the corporate income tax break. The tax helps fill Georgia coffers with more than $700 million in better economic times. The revised bill must go back to the House for approval.
Republican leaders in that chamber suggested the corporate tax phase-out might need more study. In the fiscal note for the original bill, state economists said phasing out the corporate income tax was "not expected to significantly alter growth conditions in Georgia."
But Rogers said the bill had been revised so that only Georgia-based companies would qualify for the corporate tax break. And the phase-out - which would take place over 12 years - would only occur in years when the state had a healthy budget reserve.
The House, meanwhile, killed a measure that would have allowed voters to decide in 2010 whether to boost the state homestead exemption from $2,000 to $4,000.
Georgia Republican leaders have pitched it as a much needed "stimulus package" for homeowners. And state Rep. Jan Jones, R-Alpharetta, described it as a "little cost of living adjustment" for a state rule that hadn't been touched since 1937.
But it ran headlong into fierce opposition from Georgia's Democratic minority for the second time this month. Democrats argued it would force local governments to cut services or hike property taxes amid the economic downturn.
The Democrats denied the measure the two-thirds majority it needed when it came up earlier this month, and voted on similar margins Wednesday to reject it by a 109-63 vote.
The homestead exemption is subtracted from the taxable value of a house, effectively reducing the owner's tax bill.
The effort to double the homestead exemption is one of several property tax bills pending in the Georgia Legislature this year.
"Once again we're passing the buck down to our local communities," said House Minority Leader DuBose Porter of Dublin. "And that will result in a couple of things: Higher millage rates and cuts in education."
Disappointed Republican sponsors pitched it as a simple measure to help Georgia residents cope with a foreclosure crisis.
"An unprecedented economic crisis faces us today," said House Majority Leader Jerry Keen. "And what we're trying to do in Senate Bill 83 is to allow your voters, your neighbors, your family and your friends in your district that opportunity to realize a very modest but needed break in their property taxes."