---
title: HB 328. Revenue and taxation; increase annual aggregate limit for tax credits available for certain contributions to student scholarship organizations
collection: bills
id: 2025-2026/hb328
cite_as: HB 328, 2025-2026 Regular Session (Ga.)
canonical_url: https://georgiacommons.org/bills/2025-2026/hb328
md_url: https://georgiacommons.org/bills/2025-2026/hb328.md
text_url: https://georgiacommons.org/bills/2025-2026/hb328/text
source_url: https://www.legis.ga.gov/legislation/70057
date: 2026-05-11
status: passed
corpus_version: bills-2026-09-13
license: Public record of the Georgia General Assembly, via LegiScan; see about.md
publisher: Georgia Commons, an independent project of Georgia Civic Data. Not the State of Georgia. Not legal advice.
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omitted: votes and history
omitted_chars: 2067
omitted_url: https://georgiacommons.org/bills/2025-2026/hb328.md?full=1
bill_number: HB 328
session: 2025-2026 Regular Session
session_slug: 2025-2026
chamber: House
bill_type: bill
status_date: 2026-05-11
last_action: Effective Date 2026-07-01
sponsors:
  - Kasey Carpenter
  - Scott Hilton
  - John Carson
  - Jason Ridley
  - Houston Gaines
  - Martin Momtahan
  - Shawn Still
text_version: Enrolled
has_text: true
legiscan_url: https://legiscan.com/GA/bill/HB328/2025
upstream_id: 1961041
summaries_model: claude-sonnet-5
topic_tags:
  - private school scholarships
  - tax credits
  - virtual schools
  - education funding
  - transit sales tax
---

# HB 328. Revenue and taxation; increase annual aggregate limit for tax credits available for certain contributions to student scholarship organizations

## Text

House Bill 328 (AS PASSED HOUSE AND SENATE)
By: Representatives Carpenter of the 4th, Hilton of the 48th, Carson of the 46th, Ridley of the
6th, Gaines of the 120th, and others
A BILL TO BE ENTITLED
AN ACT
To amend Titles 20 and 48 of the Official Code of Georgia Annotated, relating to education
and revenue and taxation, respectively, so as to revise provisions for student eligibility and
maximum scholarship amounts; to provide for military students and students with
Individualized Education Programs (IEPs), Section 504 Plans, or other designated
disabilities; to provide for such designation; to prohibit members of the General Assembly
and their spouses from receiving income from student scholarship organizations that receive
certain contributions; to provide for an alternative method for the deposit of a scholarship
award; to prohibit virtual instruction to out-of-system students if the local school system has
a College and Career Ready Performance Index average below 65 for the previous two
school years; to prohibit out-of-system students from being counted toward equalization
funds received by a local school system; to require local school systems that enroll
out-of-system students to compile a list of such out-of-system students; to increase the annual
aggregate limit of tax credits allowed for certain contributions to student scholarship
organizations; to increase the annual aggregate amount of such tax credits allowed for
business enterprises for state insurance premium tax liability; to increase the annual
aggregate limit for tax credits available for qualified education donations; to prohibit the use
of special district mass transportation sales and use taxes for the provision of free or reduced
fares for public transit services; to provide for time limits upon the recalling of an election
for approval of special districts for transit purposes sales and use tax (Transit SPLOST)
within nonattainment areas upon failure to approve; to provide for related matters; to provide
for effective dates and applicability; to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Title 20 of the Official Code of Georgia Annotated, relating to education, is amended in
Chapter 2A, relating to student scholarship organizations, by revising paragraph (1) of Code
Section 20-2A-1, relating to definitions, as follows:
"(1) 'Eligible student' means a student who is a Georgia resident who, immediately prior
to receiving a scholarship or tuition grant under Code Section 20-2A-2 and enrolling in
a qualified school or program, was enrolled in and attended for at least six weeks a
Georgia secondary or primary public school or who is eligible to enroll in a qualified first
grade, kindergarten program, or pre-kindergarten program; provided, however, that, if a
student is deemed an eligible student pursuant to this paragraph, he or she shall continue
to qualify as such until he or she graduates, reaches the age of 20, or returns to a public
school, whichever occurs first; and provided, further, that the enrollment and six-week
public school attendance requirements shall be waived in the case of a student <ins>whose
parent is an active duty military service member stationed in Georgia during the previous
year; a student with an Individualized Education Program (IEP) or a Section 504 Plan or
who has been diagnosed with dyslexia, autism spectrum disorder, speech-language delay
and disorder, hearing loss, or another intellectual and developmental disability designated
by the Department of Education pursuant to Code Section 20-2A-2; or a student</ins> who,
based on the school attendance zone of his or her primary residence, is or would be
assigned to a public school that the Office of Student Achievement determines to be a
low-performing school, who is the subject of officially documented cases of school based
physical violence or student related verbal abuse threatening physical harm, or who was
enrolled in a home study program meeting the requirements of subsection (c) of Code
Section 20-2-690 for at least one year immediately prior to receiving a scholarship or
tuition grant under Code Section 20-2A-2."
SECTION 2.
Said title is further amended in said chapter by revising paragraph (1) of Code Section
20-2A-2, relating to requirements for student scholarship organizations, as follows:
"(1) With respect to the first $1.5 million of its annual revenue received from donations
for scholarships or tuition grants, including interest earned on deposits and investments
of scholarship funds or tuition grants, shall obligate at least 92 percent of such revenue
for scholarships or tuition grants; with respect to its annual revenue received from
donations for scholarships or tuition grants in excess of $1.5 million and up to and
including $10 million, including interest earned on deposits and investments of
scholarship funds or tuition grants, shall obligate at least 94 percent of such revenue for
scholarships or tuition grants; with respect to its annual revenue received from donations
for scholarships or tuition grants in excess of $10 million and up to and including $20
million, including interest earned on deposits and investments of scholarship funds or
tuition grants, shall obligate at least 95 percent of such revenue for scholarships or tuition
grants; and, with respect to its annual revenue received from donations for scholarships
or tuition grants in excess of $20 million, including interest earned on deposits and
investments of scholarship funds or tuition grants, shall obligate at least 96 percent of
such revenue for scholarships or tuition grants. On or before the end of the calendar year
following the calendar year in which a student scholarship organization receives revenues
from donations and obligates them for the awarding of scholarships or tuition grants, the
student scholarship organization shall designate the obligated revenues for specific
student recipients. Once the student scholarship organization designates obligated
revenues for specific student recipients, in the case of multiyear scholarships or tuition
grants, the student scholarship organization may distribute the entire obligated and
designated revenues to a qualified school or program to be held in accordance with
Department of Revenue rules for distribution to the specified recipients during the years
in which the recipients are projected in writing by the private school to be enrolled at the
qualified school or program. In making a multiyear distribution to a qualified school or
program, the student scholarship organization shall require that if the designated student
becomes ineligible or for any other reason the qualified school or program elects not to
continue disbursement of the multiyear scholarship or tuition grant to the designated
student for all the projected years, then the qualified school or program shall immediately
return the remaining funds to the student scholarship organization. Once the student
scholarship organization designates obligated revenues for specific student recipients, in
the case of multiyear scholarships or tuition grants for which the student scholarship
organization distributes the obligated and designated revenues to a qualified school or
program annually rather than the entire amount, if the designated student becomes
ineligible or for any other reason the student scholarship organization elects not to
continue disbursement for all years, then the student scholarship organization shall
designate any remaining previously obligated revenues for a new specific student
recipient on or before the end of the following calendar year. <ins>Unless the student has an
Individualized Education Program (IEP) or a Section 504 Plan or has been diagnosed
with dyslexia, autism spectrum disorder, speech-language delay and disorder, hearing
loss, or another intellectual and developmental disability (IDD) designated by the
Department of Education pursuant to this paragraph, the</ins> <del>The</del> maximum scholarship
amount given by the student scholarship organization in any given year shall not exceed
the average state and local expenditures per student in fall enrollment in public
elementary and secondary education for this state. The Department of Education shall
determine and publish such amount <ins>and such designated IDDs</ins> annually, no later than
January 1;"
SECTION 3.
Said title is further amended in said chapter by adding a new Code section to read as follows:
<ins>"20-2A-2.2.
No member of the General Assembly or a spouse of a member of the General Assembly
shall receive any income from a student scholarship organization during a taxable year in
which such organization receives a contribution for which a tax credit pursuant to Code
Section 48-7-29.16 was approved."
</ins> SECTION 4.
Said title is further amended in said chapter by revising Code Section 20-2A-5, relating to
parent or guardian endorsement of award required, as follows:
"20-2A-5.
The parent or guardian to whom a scholarship award is granted must restrictively endorse
the scholarship award to the private school for deposit into the account of the private school
<ins>or authorize by electronic signature for the deposit to be made into the account of the
private school consistent with regulations issued by the Department of Revenue.</ins> The
parent or guardian may not designate any entity or individual associated with the
participating private school as the parent's attorney in fact to endorse a scholarship award.
A participant who fails to comply with this Code section forfeits the scholarship."
SECTION 5.
Said title is further amended in Part 4 of Article 6 of Chapter 2, relating to financing relative
to the "Quality Basic Education Act," by revising Code Section 20-2-167.2 as follows:
"20-2-167.2.
(a) As used in this Code section, the term:
(1) 'Out-of-system student' means a student who is enrolled in a local school system and
receives virtual instruction from a virtual school within <del>the</del> <ins>such</ins> local school system, but
who resides in another local school system.
(2) 'Virtual instruction' means online instruction for grades kindergarten through 12.
Such term shall not include virtual instruction received through the Georgia Virtual
School established pursuant to Code Section 20-2-319.1 or the clearing-house established
pursuant to Code Section 20-2-319.3, or through a state charter school which provides
virtual instruction.
(3) 'Virtual school' means a school within a local school system which provides virtual
instruction.
(b) A local school system that provides virtual instruction through a virtual school whose
total student enrollment is composed of more than 5 percent out-of-system students shall:
(1) Ensure that 90 percent of funds earned pursuant to this article for out-of-system
students are expended for costs for virtual instruction for such out-of-system students and
shall return any excess funds to the state treasury which are not expended for such
purposes; <del>and
</del> (2) Include in the virtual school and local school system's College and Career Ready
Performance Index data academic achievement results for out-of-system students; <ins>and
(3) Not provide virtual instruction to out-of-system students in the current academic year
if the local school system or its virtual school has failed to maintain an average of 65 or
above on the College and Career Ready Performance Index over the previous two school
years.
(c) Each local school system that enrolls any out-of-system students shall compile a
complete list of such out-of-system students as of October 1 and March 1 of each year. No
local school system shall include any such out-of-system student in any count for purposes
related to qualifying for equalization funds pursuant to Code Section 20-2-165.
(c)(d)</ins> This Code section shall not be subject to waiver pursuant to Code Section 20-2-82
for a strategic waivers school system, Code Section 20-2-2063.2 for a charter system, Code
Section 20-2-2065 for a charter school, or Code Section 20-2-244."
SECTION 6.
Title 48 of the Official Code of Georgia Annotated, relating revenue and taxation, is
amended in Chapter 7, relating to income tax imposition, rate, computation, exemptions, and
credits, by revising paragraphs (1) and (1.1) of subsection (f) of Code Section 48-7-29.16,
relating to tax credits for contributions to student scholarship organizations, as follows:
"(f)(1) The aggregate amount of tax credits allowed under this Code section shall not
exceed:
<del>(A) Fifty-eight million dollars for the year ending on December 31, 2018;
(B) For 2019 through 2022, $100 million per year; and
(C) For 2023 and all subsequent years, $120</del> <ins>$150</ins> million per year.
(1.1) In no event shall the aggregate amount of tax credits allowed under this Code
section to all business enterprises for state insurance premium tax liability owed pursuant
to Code Section 33-8-4 exceed <del>$6 million</del> <ins>6 percent of the aggregate amount of tax
credits allowed under this Code section</ins> for any year <ins>as provided in paragraph (1) of this
subsection."
</ins> SECTION 7.
Said title is further amended in said chapter by revising paragraph (1) of subsection (f) of
Code Section 48-7-29.21, relating to tax credits for donations to nonprofit corporations
awarding grants to public schools, as follows:
"(f)(1) In no event shall the aggregate amount of tax credits allowed under this Code
section exceed: <ins>$25 million per calendar year
</ins> <del>(A) $5 million for the tax year ending on December 31, 2023; or
(B) $15 million for the tax year 2024, and for all subsequent tax years."
</del>
SECTION 8.
Said title is further amended in Chapter 8, relating to sales and use taxes, by revising
paragraph (4) of Code Section 48-8-260, relating to definitions relative to special district
mass transportation sales and use tax, as follows:
"(4) 'Transportation purposes' means and includes:
(A) Roads, bridges, public transit, rails, airports, buses, seaports, including without
limitation road, street, and bridge purposes pursuant to paragraph (1) of subsection (b)
of Code Section 48-8-121, and all accompanying infrastructure and services necessary
to provide access to <del>these</del> <ins>such</ins> transportation facilities, including new general
obligation debt and other multiyear obligations issued to finance such purposes <ins>but
excluding purposes of providing free or reduced fares for public transit services;
</ins> (B) The retirement of previously incurred general obligation debt with respect only to
such purposes as identified in subparagraph (A) of this paragraph;
(C) A capital outlay project or projects under subparagraph (a)(1)(M) of Code
Section 48-8-111, with respect only to such purposes as identified in subparagraph (A)
of this paragraph; or
(D) Any combination of two or more of the foregoing."
SECTION 9.
Said title is further amended is said chapter by revising subsection (c) of Code Section
48-8-269.46, relating to ballot question, expenses of election, resubmission of question, and
general obligation debt for special districts within nonattainment areas relative to special
districts for transit purposes sales and use tax (Transit SPLOST), by revising subsection (c)
as follows:
"(c) Where such question is not approved by the voters, the county may resubmit such
question <del>from time to time</del> upon compliance with the requirements of this article <ins>and after
the passage of eight years from the date the special election was previously held."
</ins>
SECTION 10.
(a) Except as provide in subsection (b) of this section, this Act shall become effective on
July 1, 2026, and shall be applicable to all taxable years beginning on or after January 1,
2027.
(b) Section 5 of this Act shall become effective on July 1, 2026,
SECTION 11.
All laws and parts of laws in conflict with this Act are repealed.

## Summaries written by Georgia Commons

The following was written by claude-sonnet-5 from the text above and is not part of the bill. Quote the text, not the summary.

House Bill 328 raises the yearly cap on Georgia's tax credit for donations to private-school scholarship funds from $120 million to $150 million, while also changing who qualifies for scholarships, restricting virtual school enrollment across district lines, and limiting how transit sales tax money can be used.

### Plain-language summary

Georgia allows donors to get a state tax credit for contributing to student scholarship organizations (SSOs), which fund private-school scholarships. This bill raises the annual statewide cap on those credits from $120 million to $150 million, and changes the separate cap on credits businesses can claim against insurance premium taxes from a flat $6 million to 6 percent of the total credit pool. It also raises the cap on a related tax credit for donations to public school grant programs from $15 million to $25 million per year.
The bill changes who counts as an eligible scholarship student, waiving the usual six-week public school attendance requirement for children of active-duty military stationed in Georgia and for students with an IEP, a Section 504 Plan, or certain diagnosed disabilities, and lets those students receive scholarships above the normal per-student cap. It bars General Assembly members and their spouses from taking income from an SSO in a year it received credited contributions. Separately, it restricts virtual instruction to out-of-district students where school performance is low, excludes those students from equalization funding counts, and limits how transit sales tax revenue and reelection timing work for local transit ballot measures. Most provisions take effect July 1, 2026, applying to tax years starting January 1, 2027.

### What it does

- Raises the statewide annual cap on tax credits for donations to student scholarship organizations from $120 million to $150 million.
- Changes the insurance premium tax credit sub-cap from a flat $6 million to 6 percent of the total scholarship tax credit pool.
- Increases the annual cap on tax credits for donations to public school grant programs from $15 million to $25 million.
- Waives the six-week public school attendance requirement for scholarship eligibility for military dependents and students with an IEP, Section 504 Plan, or certain diagnosed disabilities, and lets those students exceed the usual scholarship dollar cap.
- Bars members of the General Assembly and their spouses from receiving income from a scholarship organization in a year it received tax-credited donations.
- Prohibits a local school system from offering virtual instruction to out-of-district students if its performance index average falls below 65 for two straight years, and excludes those students from equalization funding counts.

### Who it affects

Private school scholarship donors and recipients, families of active-duty military and students with disabilities seeking scholarships, members of the General Assembly and their spouses, local school systems that run virtual schools enrolling out-of-district students, public school grant donors, and counties considering transit sales tax measures.

### Why it matters

More donors could claim scholarship tax credits before the pool runs out each year, potentially expanding private-school access, while military and disability-designated students gain easier eligibility and higher scholarship amounts. Meanwhile, districts with low-performing virtual schools would lose the ability to enroll outside students, and transit sales tax revenue could no longer subsidize free or reduced fares.

### Key provisions

- Section 1 waives the six-week public school attendance rule for military dependents and students with an IEP, Section 504 Plan, or designated disability, letting them qualify for scholarships immediately.
- Section 2 exempts students with those same designations from the cap limiting scholarships to the average per-student public school expenditure.
- Section 3 creates new Code Section 20-2A-2.2 barring legislators and their spouses from receiving income from a scholarship organization in a year it received credited donations.
- Section 4 allows parents to authorize scholarship deposits by electronic signature instead of only by physical endorsement.
- Section 5 bars virtual instruction to out-of-district students if a school system's performance index averages below 65 over the prior two years, and excludes such students from equalization fund counts.
- Section 6 raises the overall scholarship tax credit cap from $120 million to $150 million per year and changes the insurance premium tax sub-cap to 6 percent of that total.
- Section 7 raises the cap on tax credits for donations to public school grant nonprofits from $15 million to $25 million per year.
- Section 8 bars transit sales tax revenue from funding free or reduced public transit fares, and Section 9 requires an eight-year wait before resubmitting a failed transit sales tax ballot question.

## Status

- Status: Passed (2026-05-11)
- Last action: Effective Date 2026-07-01 (2026-05-11)
- Sponsors: Kasey Carpenter, Scott Hilton, John Carson, Jason Ridley, Houston Gaines, Martin Momtahan, Shawn Still
- Official page: https://www.legis.ga.gov/legislation/70057

> The history, votes, and amendments (2,067 characters) are at https://georgiacommons.org/bills/2025-2026/hb328.md?full=1