HB 1474: Supporting Early Education and Development (SEED) Act; enact

House Bill 1474

By: Representatives Park of the 107th, Hugley of the 141st, Miller of the 62nd, Gisler of the 121st, Campbell of the 35th, and others

A BILL TO BE ENTITLED

AN ACT

To amend Article 1 of Chapter 1A of Title 20 of the Official Code of Georgia Annotated, relating to general provisions relative to early care and learning, so as to provide for the annual publication of a map identifying geographic areas where the demand for organizations that provide care for children between the ages of zero and five exceeds available licensed slots by a ratio of at least three to one; to amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to imposition, rate, computation, exemptions, and credits relative to state income taxes, so as to provide for an income tax credit for contributions to childcare organizations; to provide for an annual limit on such credits; to provide for preapproval procedures and timelines; to provide for required expenditure of funds received by childcare organizations; to provide for rules and regulations; to provide for reporting; to provide for an annual audit; to provide for related matters; to provide for legislative findings; to provide for definitions; to provide for an effective date and applicability; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

The Act shall be known and may be cited as the "Supporting Early Education and Development (SEED) Act."

SECTION 2.

The General Assembly finds that:

(1) Access to high quality early childhood education is the primary "workforce behind the workforce," enabling parents to participate in Georgia's economy while ensuring this state's future prosperity;

(2) Ninety percent of a child's brain development occurs before the age of five, with the most rapid growth occurring from birth to age three, during which the brain forms 1 million neural connections per second;

(3) Third-grade reading proficiency is a definitive predictor of future success, yet nearly two-thirds of Georgia's third graders are not reading at a proficient level, due in no small part to impediments to brain development occurring before such third graders reach the age of five;

(4) Every $1.00 invested in high quality birth to five programs yields up to a $9.00 return to this state through increased lifetime earnings and reduced expenditures on remedial education and public safety; and

(5) Childcare related workforce disruptions currently cost the Georgia economy an estimated $2.52 billion annually in lost productivity and $131.7 million in lost state tax revenue.

SECTION 3.

Article 1 of Chapter 1A of Title 20 of the Official Code of Georgia Annotated, relating to general provisions relative to early care and learning, is amended in Code Section 20-1A-4, relating to department powers and duties, by striking "and" at the end of paragraph (13), by replacing the period at the end of paragraph (14) with "; and", and by adding a new paragraph to read as follows:

"(15) To publish on the home page of the department's website a map to be updated no later than November 1 of each calendar year identifying geographic areas where the demand for organizations that provide care for children between the ages of zero and five exceeds available licensed slots by a ratio of at least three to one."

SECTION 4.

Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to imposition, rate, computation, exemptions, and credits relative to state income taxes, is amended by adding a new Code section to read as follows:

"48-7-40.19.

(a) As used in this Code section, the term:

(1) 'Childcare desert' means geographic areas where the demand for organizations that provide care for children between the ages of zero and five exceeds available licensed slots by a ratio of at least three to one, as identified on a map published on the Department of Early Care and Learning's website.

(2) 'Childcare organization' means an organization that provides care for children between the ages of zero and five that is tax exempt under Section 501(c)(3) of the Internal Revenue Code and Quality Rated by the Department of Early Care and Learning.

(3) 'Qualified childcare organization expense' or 'qualified contribution' means the contribution of funds by an individual or corporate taxpayer to a childcare organization for the direct benefit of such organization during the tax year for which a credit is claimed under this Code section.

(b) An individual taxpayer shall be allowed a credit against the tax imposed by this chapter for qualified childcare organization expenses as follows:

(1) In the case of a single individual or a head of household, the actual amount expended;

(2) In the case of a married couple filing a joint return, the actual amount expended; or

(3) In the case of an individual who is a member of a limited liability company duly formed under state law, a shareholder of a Subchapter 'S' corporation, or a partner in a partnership, the actual amount expended; provided, however, that tax credits pursuant to this paragraph shall be allowed only for the portion of the income on which such tax was actually paid by such individual.

(c) An individual taxpayer shall be limited in his or her qualified childcare organization expenses allowable for credit under this Code section, and the commissioner shall not approve qualified childcare organization expenses which exceed the following limits:

(1) In the case of a single individual or a head of household, $5,000.00;

(2) In the case of a married couple filing a joint return, $10,000.00; or

(3) In the case of an individual who is a member of a limited liability company duly formed under state law, a shareholder of a Subchapter 'S' corporation, or a partner in a partnership, $25,000.00.

(d) A corporation or other entity shall be allowed a credit against the tax imposed by this chapter for qualified childcare organization expenses in an amount not to exceed the actual amount expended or 75 percent of the corporation's income tax liability, whichever is less.

(e) In no event shall the total amount of the tax credit under this Code section for a taxable year exceed the taxpayer's income tax liability. Any unused tax credit shall be allowed the taxpayer against the succeeding ten years' tax liability. No such credit shall be allowed the taxpayer against any prior years' tax liability.

(f)(1) In no event shall the aggregate amount of tax credits allowed under this Code section exceed $100 million per taxable year.

(2) From January 1 to June 30 each taxable year, the commissioner shall only preapprove credits for qualified contributions to childcare organizations that are located in childcare deserts or dedicated to expanding childcare capacity for children between the ages of zero and three. From July 1 to December 31 each taxable year, subject to the aggregate limit in paragraph (1) of this subsection, the commissioner shall approve credits for qualified contributions to other childcare organizations.

(3) For purposes of paragraphs (1) and (2) of this subsection, a childcare organization shall notify a taxpayer considering making a qualified contribution of the requirements of this Code section. Before making a qualified contribution to a childcare organization, the taxpayer shall electronically notify the department, in a manner specified by the department, of the total amount of the qualified contribution to such childcare organization. The commissioner shall preapprove or deny the requested amount or a portion of such amount within 30 days after receiving the request and shall provide written notice to the taxpayer and childcare organization of such preapproval or denial which shall not require any signed release or notarized approval by the taxpayer. In order to receive a tax credit under this Code section, a taxpayer preapproved by the commissioner on or before September 30 shall make the qualified contribution to the childcare organization within 180 days after receiving notice of preapproval from the commissioner, but not later than October 31. A taxpayer preapproved by the commissioner after September 30 shall make the qualified contribution to the childcare organization on or before December 31. If the taxpayer does not comply with this paragraph, the commissioner shall not include such preapproved contribution amount when calculating the limit prescribed in paragraph (1) of this subsection. (4)(A) The commissioner shall preapprove qualified contributions solely based on the availability of tax credits subject to the aggregate total limit established under paragraph (1) of this subsection.

(B) Upon a childcare organization's confirmation of receipt of qualified contributions that have been preapproved by the commissioner, a taxpayer preapproved by the commissioner pursuant to subsection (c) of this Code section who made such qualified contribution shall receive the full benefit of the income tax credit established by this Code section even if the childcare organization to which such taxpayer made a qualified contribution does not properly comply with the reports or filings required by this Code section.

(5) Notwithstanding any laws to the contrary, the department shall not take any adverse action against taxpayers who contribute to childcare organizations if the commissioner preapproved a qualified contribution for a tax credit prior to the date a childcare organization falls out of compliance with any of the requirements provided under this Code section, and all such qualified contributions shall remain as preapproved tax credits subject only to the contributors' compliance with paragraph (3) of this subsection.

(g) In order for a taxpayer to claim the tax credit under this Code section, a letter of confirmation of donation issued by the childcare organization to which the qualified contribution was made shall be attached to such taxpayer's tax return. However, in the event such taxpayer files an electronic return, such confirmation shall only be required to be electronically attached to the return if the Internal Revenue Service allows such attachments when the return is transmitted to the department. In the event the taxpayer files an electronic return and such confirmation is not attached because the Internal Revenue Service does not, at the time of such electronic filing, allow electronic attachments to the Georgia return, such confirmation shall be maintained by the taxpayer and made available upon request by the commissioner. The letter of confirmation of qualified contribution shall contain the taxpayer's name, address, tax identification number, the amount of qualified contribution, the date of such contribution, and the amount of the credit.

(h) No credit shall be allowed under this Code section with respect to any amount deducted from taxable net income by the taxpayer as a charitable contribution to a bona fide charitable organization qualified under Section 501(c)(3) of the Internal Revenue Code.

(i) At least 60 percent of the qualified contributions received by childcare organizations for which a taxpayer received a tax credit under the provisions of this Code section must be used by such childcare organizations for teacher salary supplements and retention bonuses. Remaining qualified contribution funds may be used for capital expansions of classrooms for children between the ages of zero and five. Any childcare organization that fails to use qualified contribution funds as specified under this subsection shall be issued a notice of noncompliance from the department that provides such childcare organization 90 days to cure such noncompliance with retroactive teacher salary supplements or retention bonuses. Any childcare organization that fails to cure such noncompliance within the 90-day period shall not be eligible to receive qualified contributions for which taxpayers may receive income tax credits pursuant to the provisions of this Code section in any subsequent taxable year.

(j) The commissioner shall be authorized to promulgate any rules and regulations necessary to implement and administer the provisions of this Code section.

(k) The department shall post the following information in a prominent location on its website:

(1) All pertinent timelines relating to the tax credit, including, but not limited to the:

(A) Beginning date when qualified contributions can be submitted for preapproval by donors for the January 1 to June 30 period;

(B) Ending date when qualified contributions can be submitted for preapproval by donors for the January 1 to June 30 period;

(C) Beginning date when qualified contributions can be submitted for preapproval by donors for the July 1 to December 31 period;

(D) Ending date when qualified contributions can be submitted for preapproval by donors for the July 1 to December 31 period; and

(E) Date by which preapproved qualified contributions are required to be sent to the childcare organization;

(2) A monthly progress report including:

(A) Total preapproved qualified contributions to date by childcare organization;

(B) Total qualified contributions received to date by childcare organization;

(C) Total aggregate amount of preapproved qualified contributions made to date; and

(D) Aggregate amount of tax credits available.

(l) The Department of Audits and Accounts shall annually conduct an audit of the tax credit program established under this Code section, including the amount and recipient childcare organization of all qualified contributions made and all tax credits received by individual and corporate donors."

SECTION 5.

This Act shall become effective on July 1, 2026, and shall be applicable to taxable years beginning on or after January 1, 2027.

SECTION 6.

All laws and parts of laws in conflict with this Act are repealed.