Revenue and taxation; increase annual aggregate limit for tax credits available for certain contributions to student scholarship organizations

2025-2026 Regular Session Introduced by Kasey Carpenter and 5 co-sponsors

House Bill 328 raises Georgia's annual tax credit limit for student scholarships from $120M to $140M, boosting funding while changing credit rules for contributors.

Act 463

#education #insurance #revenueandtaxation

Purpose and Intent

House Bill 328 aims to amend the tax code in Georgia to revise the tax credits available for contributions to student scholarship organizations. The primary intent is to increase the annual aggregate limit for these tax credits, thereby encouraging more contributions to organizations that provide scholarships for students.

Key Provisions

The bill proposes several significant changes to the existing tax credit framework:

Increase in Annual Aggregate Limit:

The aggregate amount of tax credits allowed under this section will increase from $120 million to $140 million per year starting in 2023 and beyond.

Changes to Insurance Company Credits:

The amount of tax credit allowed for contributions from business enterprises will be adjusted to 30% of the state insurance premium tax liability, down from 75%. However, the maximum credit amount will remain capped at $1 million.

Carry Forward Restrictions:

Tax credits will not carry forward to subsequent tax years. This means that any unused credits cannot be applied to future tax liabilities.

Preapproval Process:

Taxpayers or business enterprises must electronically notify the Department of Revenue of their intended contributions and receive preapproval within 30 days. Contributions must be made within 60 days of receiving preapproval.

First-Come, First-Served Basis:

The allocation of tax credits will be managed on a first-come, first-served basis, with the Department of Revenue maintaining a current list of available credits on its website.

Reporting Requirements:

Student scholarship organizations will be required to file an annual report detailing any fees or assessments retained during the year.

Affected Parties

Taxpayers and Business Enterprises: Those who contribute to student scholarship organizations will be directly impacted by the changes in tax credit limits and the preapproval process.

Student Scholarship Organizations: These organizations will benefit from increased funding due to higher tax credit limits, potentially allowing them to provide more scholarships to students.

Insurance Companies: The changes in the percentage of tax liability eligible for credits will affect how much insurance companies can claim.

Procedural Aspects

Introduced: February 6, 2025

Current Status: The bill has been read and referred to the Senate as of March 10, 2025, following its passage in the House on March 6, 2025.

Effective Date: The provisions of this bill will become effective on July 1, 2025, and will apply to taxable years beginning on or after January 1, 2026.

Conclusion

House Bill 328 represents a significant revision to the tax credit structure for contributions to student scholarship organizations in Georgia. By increasing the aggregate limit and modifying the credit percentages, the bill aims to enhance funding for educational scholarships while streamlining the contribution process for taxpayers and businesses.

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