HB565: HB565 Income tax; increase annual aggregate limit for tax credits available for qualified education donations

Georgia law lets taxpayers claim an income tax credit for donations to certain nonprofit organizations that award grants to public schools, under O.C.G.A. § 48-7-29.21. That law currently caps the total amount of these credits that can be claimed statewide at $15 million per year. This bill would raise that annual ceiling to $25 million. The change would apply starting with the 2026 tax year, and the bill would take effect July 1, 2026. Once in effect, more total donations could qualify for the credit each year before the statewide cap is reached, though the bill does not change how individual donors or businesses calculate their own credit amount.

• Raises the statewide annual cap on tax credits for donations to public school grant organizations from $15 million to $25 million per calendar year.
• Removes the older, now-expired $5 million cap language that applied only to the 2023 tax year, cleaning up outdated text in the code section.
• Sets the new $25 million cap to apply to all taxable years beginning on or after January 1, 2026.
• Sets the effective date of the change as July 1, 2026.

Georgia taxpayers, individuals and businesses, who donate to nonprofit organizations that award grants for public school programs, and the nonprofit organizations themselves that receive and distribute those donations under the state's tax credit program.

Because the total credits available are capped statewide, once the cap is reached in a given year no more donors can claim the credit even if they still want to give. Raising the cap to $25 million would let more donations qualify for the tax break each year before that limit is hit.

• Section 1 amends O.C.G.A. § 48-7-29.21(f)(1), which sets the statewide limit on credits for donations to nonprofit corporations that award grants to public schools.
• The revised limit removes references to the expired $5 million cap for tax year 2023 and the $15 million cap for 2024 and later, replacing them with a flat $25 million per calendar year.
• Section 2 sets the effective date as July 1, 2026, applying to taxable years beginning on or after January 1, 2026.
• Section 3 repeals any conflicting laws, a standard closing provision.

1. 2026-02-24House Committee Favorably Reported By Substitute (House)
2. 2025-02-24House Second Readers (House)
3. 2025-02-21House First Readers (House)
4. 2025-02-20House Hopper (House)

• Rick Townsend (R, HD-179)Primary sponsor
• Lehman Franklin (R, HD-160)
• Rob Leverett (R, HD-123)
• Beth Camp (R, HD-135)
• Scott Hilton (R, HD-048)

• income tax credits
• public school funding
• education donations
• state tax policy