Tax Credits For Private Schools

Challenge to tax credit scholarships is coming to the Georgia State Supreme Court

According to Ty Tagami in the AJC, early next year, the Georgia Supreme Court will hear arguments in Gaddy v. Georgia, the lawsuit over the state’s K-12 tax credit scholarship program.
The Fulton County Superior Court dismissed the lawsuit brought by Raymond Gaddy, a taxpayer who argued the $58 million program was unconstitutional. He then appealed. The state constitution prohibits the use of tax dollars to fund “any church, sect, cult, or religious denomination.” He argues that the scholarship program is unconstitutional because it gives money to private schools with religious affiliations.
Georgia limits the tax credits to $58 million a year, and in recent years, the $58 million in donations to the program has been taken on the first day of availability. Proponents cite that as evidence of the program’s popularity.
Tax Credits For Private Schools
Since 2008 Georgia has allowed married taxpayers filing jointly to take up to $2,500 of their state taxes and redirect them to be used as scholarships for private schools. Single filers can redirect up to $1,000, and anyone in the state can participate – not just parents with kids in school.
This amazing program, known as the Qualified Education Expense (QEE) Tax Credit, will actually give you a state tax credit -not just a deduction – for money that you designate for the school of your choice. This credit extends even to religious schools, and since you donate the funds through a non-profit corporation (called a Student Scholarship Organization, or SSO) you can also take the donation as a deduction on your federal tax return. Because it is a state tax credit, you get all the money you donate back next year when you file your taxes.
In 2015 the State allocated $58,000,000 in tax revenue that was redirected into the hands of students at Georgia’s private schools.
Education Reform Commission (ERC)
In January 2015, Governor Nathan Deal created an Education Reform Commission (ERC) with 30+ members consisting of teachers, superintendents, principals, state legislators, and heads of various education related firms.  Governor Deal charged this commission with reshaping and revolutionizing Georgia’s education system.
On December 15, the ERC presented its  Final Recommendations to Governor Nathan Deal.  The Commission’s number one priority was to “True up pledges to actual contributions annually for the state’s existing tuition tax credit scholarship program.”
The commission believes that requiring the Department of Revenue to switch from counting pledges to counting actual contributions against the tax credit cap, adjusting the tax credits as actual numbers come in, and informing Student Scholarship Organizations when additional space becomes available will ensure the full allotment of tax credits are utilized. By doing so, Georgia can provide tuition assistance to the number of families originally intended by the tax credit program, rather than losing the funds each year to unfulfilled donations.