Georgia considers opting into new federal education tax credit program beginning January 1, 2027

What the governor is expected to announce

Gov. Brian Kemp is expected to outline Georgia’s plans to participate in a new federal education-related tax credit tied to donations that fund K-12 scholarships. The program is scheduled to begin on Jan. 1, 2027, and would require Georgia to formally elect participation and identify eligible scholarship organizations in advance.

How the federal tax credit works

Under the federal framework, individual taxpayers would be able to claim a nonrefundable, dollar-for-dollar federal income tax credit for cash contributions to approved Scholarship Granting Organizations (SGOs). The credit is capped at $1,700 per taxpayer per year. To qualify, the recipient organization must meet federal requirements and must be included on a state-submitted list for a participating “covered state.”

Scholarship funds distributed by SGOs are designed to support qualified elementary and secondary education expenses. Student eligibility rules focus on low- and middle-income families, with scholarship eligibility tied to income thresholds set under the federal program.

Georgia’s role: participation is optional but operationally significant

The federal structure is built around state participation: without a state election and state identification of eligible SGOs, contributions made by residents would not qualify for the new federal credit. That makes Georgia’s decision pivotal for whether the federal credit can be used to support scholarship programs operating within the state.

How this differs from existing Georgia education tax-credit programs

Georgia already has tax-credit mechanisms connected to education, including programs that allow taxpayers to redirect certain state income tax dollars to approved education-related purposes. The new federal credit would operate separately from Georgia’s state income tax system, potentially expanding the pool of incentives available to donors by adding a federal benefit on top of any existing state structures, depending on how Georgia aligns state approvals and administrative processes.

Key policy questions likely to shape the rollout

• Administration and oversight: how Georgia will vet, approve, and monitor SGOs that seek placement on the state list.

• Eligibility and distribution: how scholarship criteria and award decisions will be implemented in practice under federal rules focused on income thresholds.

• Scale and fiscal exposure: the federal credit is capped per donor but is expected to operate at large scale if widely used, raising questions about participation levels and program management capacity.

The next procedural step for Georgia is an election to participate and the creation of an approved in-state list of scholarship organizations for the 2027 tax year.

Timeline

The program’s start date is Jan. 1, 2027. Georgia’s participation decision and SGO listings would need to be completed ahead of that launch to allow eligible donations to be made and credited under the new federal rules.