HB364: HB364 Income tax; allow a noncustodial parent to claim a tax credit based upon the federal qualified child and dependent care tax credit

Georgia currently allows taxpayers a state income tax credit tied to the federal child and dependent care tax credit, worth 30 percent of the federal credit amount claimed under Section 21 of the Internal Revenue Code. Under federal rules, only the custodial parent can normally claim that credit. This bill changes Georgia's version of the credit (O.C.G.A. § 48-7-29.10) so that a noncustodial parent who is denied the federal credit solely because they are not the custodial parent can still claim the Georgia credit, as long as they paid at least half of the child's support for the year. The change would take effect July 1, 2025, and would apply to tax years beginning on or after January 1, 2026.

• Amends O.C.G.A. § 48-7-29.10 to let a noncustodial parent claim Georgia's child and dependent care tax credit even though they cannot claim the related federal credit.
• Requires the noncustodial parent to have provided at least one-half of the qualifying child's support for the year to qualify for the state credit.
• Keeps the existing credit formula, which sets the state credit at 30 percent of the federal Section 21 credit amount for tax years starting in 2008 and after.
• Sets an effective date of July 1, 2025, with the change applying only to tax years beginning on or after January 1, 2026.

Noncustodial parents in Georgia who pay for a child's care and provide at least half of that child's financial support, as well as the Georgia Department of Revenue, which administers the state income tax credit.

Noncustodial parents who help pay for child care but cannot claim the federal dependent care credit because they are not the custodial parent would gain access to a Georgia state tax credit, potentially lowering their state tax bill starting with the 2026 tax year.

• Section 1 revises subsection (a) of O.C.G.A. § 48-7-29.10 to add an exception for noncustodial parents who are denied the federal credit due to custody status.
• The exception requires the noncustodial parent to have provided at least one-half of the qualifying child's support for the year.
• The credit amount remains tied to 30 percent of the federal Section 21 child and dependent care credit, per the existing percentage schedule.
• Section 2 sets the effective date as July 1, 2025, applicable to taxable years beginning on or after January 1, 2026.
• Section 3 repeals any conflicting laws.

1. 2025-02-12House Second Readers (House)
2. 2025-02-11House First Readers (House)
3. 2025-02-10House Hopper (House)

• Yasmin Neal (D, HD-079)Primary sponsor

• income tax credits
• child care costs
• noncustodial parents
• Georgia tax law