HB328: HB328 Revenue and taxation; increase annual aggregate limit for tax credits available for certain contributions to student scholarship organizations

Georgia gives tax credits to people and businesses who donate to student scholarship organizations (SSOs), which use the money for private school scholarships. House Bill 328 raises the total amount of those credits allowed each year from $120 million to $150 million starting in 2023, and changes the separate cap on credits businesses can use against their insurance premium tax from a flat $6 million to 6 percent of the overall SSO credit total. It also raises the cap for a related tax credit for donations to public school grant programs. The bill exempts military families and students with an IEP, a Section 504 Plan, or certain diagnosed disabilities from the usual six-week public school attendance requirement and from the scholarship dollar cap. It bars state lawmakers and their spouses from earning income from an SSO that received credit-eligible donations. Separately, it limits virtual school funding for out-of-system students, bans using Transit SPLOST sales tax money for free or reduced transit fares, and sets an eight-year wait before a failed Transit SPLOST vote can be resubmitted. Most changes take effect July 1, 2026, applying to tax years starting January 1, 2027, except the virtual school section, effective July 1, 2026.

• Raises the statewide annual cap on tax credits for donations to student scholarship organizations from $120 million to $150 million for 2023 and later years.
• Changes the separate cap on credits businesses can claim against insurance premium taxes from a flat $6 million to 6 percent of the total SSO credit amount for that year.
• Exempts military-connected students and students with an IEP, Section 504 Plan, or certain diagnosed disabilities from the normal six-week public school attendance rule and from the scholarship dollar cap.
• Bars members of the Georgia General Assembly and their spouses from receiving income from an SSO in any year that SSO received a credit-eligible donation.
• Bars local school systems from counting out-of-system virtual students toward equalization funding and requires them to compile lists of those students; blocks virtual instruction to out-of-system students if a district's performance index averaged below 65 for two years.
• Prohibits Transit SPLOST sales tax revenue from being used to pay for free or reduced public transit fares and requires an eight-year wait before resubmitting a failed Transit SPLOST vote in nonattainment areas.

Families seeking private school scholarships, especially military families and students with IEPs or 504 plans, private schools, student scholarship organizations, taxpayers and insurance companies claiming the credits, state legislators and spouses, local school systems running virtual schools, and counties running Transit SPLOST elections.

More tax-credit money could flow to private school scholarships, and certain students would qualify more easily and without a dollar cap. Lawmakers would be barred from profiting off scholarship groups, virtual-school funding rules would tighten for some districts, and counties could no longer use transit sales taxes to subsidize free bus or rail fares.

• Section 1 exempts students with active-duty military parents stationed in Georgia and students with an IEP, 504 Plan, or certain diagnosed disabilities from the six-week public school enrollment rule for scholarship eligibility.
• Section 2 exempts those same designated students from the cap that otherwise limits a scholarship to the state's average per-student public school spending.
• Section 3 creates new Code Section 20-2A-2.2 barring legislators and spouses from receiving income from an SSO in a year it received a credit-eligible donation.
• Section 4 lets a parent authorize scholarship deposits by electronic signature instead of only a physical endorsement.
• Section 5 bars counting out-of-system virtual students toward equalization funding, requires districts to list such students twice yearly, and blocks virtual instruction to out-of-system students if the district's performance index averaged below 65 over two years.
• Section 6 raises the SSO tax credit cap to $150 million per year and changes the insurance premium tax credit sub-cap to 6 percent of that total.
• Section 7 raises the cap on tax credits for donations to public school grant nonprofits to $15 million per year starting in 2024.
• Sections 8 and 9 bar Transit SPLOST funds from covering free or reduced transit fares and require an eight-year wait before resubmitting a failed Transit SPLOST vote in nonattainment areas.

1. 2026-05-11Effective Date 2026-07-01
2. 2026-05-11Act 463
3. 2026-05-11House Date Signed by Governor (House)
4. 2026-04-10House Sent to Governor (House)
5. 2026-04-02Senate Agreed House Amend or Sub (Senate)
6. 2026-03-31House Agreed Senate Amend or Sub As Amended (House)
7. 2026-03-25Senate Passed/Adopted By Substitute (Senate)
8. 2026-03-25Senate Third Read (Senate)

• Kasey Carpenter (R, HD-004)Primary sponsor
• Scott Hilton (R, HD-048)
• John Carson (R, HD-046)
• Jason Ridley (R, HD-006)
• Houston Gaines (R, HD-120)
• Martin Momtahan (R, HD-017)
• Shawn Still (R, SD-048)

1. PassedHouse voteMarch 6, 2025

   98 yea, 75 nay (1 not voting, 6 absent)

   Passage: House Vote #267

2. PassedSenate voteMarch 25, 2026

   32 yea, 19 nay (2 not voting, 1 absent)

   Motion To Engross: Hb 328, Hb 369, Hb 519, Hb 1112: Senate Vote #800

3. PassedSenate voteMarch 25, 2026

   30 yea, 20 nay (2 not voting, 2 absent)

   Passage By Substitute: Senate Vote #802

4. PassedHouse voteMarch 31, 2026

   99 yea, 67 nay (2 not voting, 8 absent)

   Agree To Senate Sub As Am: House Vote #831

5. PassedSenate voteApril 2, 2026

   30 yea, 22 nay (0 not voting, 2 absent)

   Shall The Ruling Of The Chair Be Sustained: Senate Vote #972

6. PassedSenate voteApril 2, 2026

   30 yea, 22 nay (0 not voting, 2 absent)

   Agree To House Amendment To Senate Substitute: Senate Vote #973

• private school scholarships
• tax credits
• special education
• transit sales tax
• school funding