Frequently Asked Questions
2023 Tax Credit Limits Based on Filing Status:
|Tax Filing Status||Previous Limit||New Limit|
|Married Separate Filer||$1,250||$2,500|
|Married Joint Filer||$2,500||$5,000|
|Pass-Through Owner (not making HB 149 election)*||$10,000||$25,000|
|C Corp, Trust, or Pass-Through electing to pay tax at the entity level (HB 149)||75% of annual tax liability|
|New for 2023: Business that pays insurance premium tax||75% of annual tax liability, but credit shall not exceed $1 million|
*Pass-through income required to support a $25,000 tax credit is $434,783 ($25,000 divided by .0575 = $434,783). Keep in mind that income
from the pass-throughs can include both profits (K-1) and wages (W-2) income. Pass-through income required to support a $10,000 tax credit
is $173,913. *For 2023, the tax credit cap increased to $120 million per year from $100 million per year.
GRACE Scholars was founded by former Archbishop Wilton Gregory of Atlanta and Bishop J. Kevin Boland of Savannah in 2008 to take advantage of the SSO/tax credit legislation. Archbishop Gregory Hartmayer, OFM Conv. of the Archdiocese of Atlanta and Bishop Stephen Parkes of the Diocese of Savannah currently serve as the Chair and Vice Chair of the GRACE Board of Directors and are committed supporters of the GRACE mission.
GRACE Scholars is a Georgia nonprofit corporation and tax exempt charity (501-c-3 organization) and has met the requirements for designation as a Student Scholarship Organization (SSO) in Georgia. Since GRACE is an SSO, Georgia taxpayers can contribute to GRACE in exchange for a generous tax benefit created by the Georgia legislature – a 100 percent tax credit. Since 2008, thousands of taxpayers have contributed to GRACE. The donations collected become scholarships for students wanting to attend one of thirty-four GRACE participating schools in both the Archdiocese of Atlanta and the Diocese of Savannah. All students receiving awards have demonstrated financial need and are funded for their entire career at a school as long as they demonstrate need each year.
Yes. You can designate any Catholic school participating in GRACE. Click here for the link of participating schools.
You can also designate your contribution to the Board Choice (BC) fund or the Economically Disadvantaged Family Fund (EDFF), which serves the poorest of GRACE’s families and students. BC and EDFF funds are allocated to schools by the GRACE Board of Directors.
You may split your contributions among up to three designations. Simply indicate on your pre-registration form how much money you would like to go to each school.
If scholarship needs are filled at a designated GRACE school, funds may be directed to another school with unmet need to comply with state law regarding the minimum annual distribution of funds.
Because there are limited tax credits available each year, a taxpayer interested in contributing to GRACE must be pre-approved by the Georgia Department of Revenue (DOR). In 2008, the Georgia legislature placed an annual cap on the amount of available education expense credits. Since 2015, the entire $58 million cap has been met on the first business day of the year with requests actually exceeding the cap. As a result, Georgia taxpayers were approved for a prorated percentage of their requested amounts. In 2019, the cap was increased to $100 million and remains the cap to date.
A tax credit is significantly more beneficial than a deduction. A credit reduces your Georgia taxes dollar-for-dollar. A deduction reduces the taxable income to which the applicable tax rate is applied.
For example, suppose a taxpayer contributes $1,000 to GRACE. A 100 percent tax credit reduces the taxpayer’s Georgia income tax by $1,000. On the other hand, the state income tax rate for most Georgians is 6 percent. So a $1,000 deduction from income would only generate a $60 reduction in taxes. The difference is 100 cents on the dollar for a credit and 6 cents on the dollar for a deduction.
Yes. You may contribute a lesser amount up to the maximum limit (see FAQ – How much can I contribute? ) based on your filing status.
The answer depends on your Georgia tax filing status:
- Married filing jointly: Up to the lesser of $5,000 per year or your Georgia income tax liability.
- Married filing separately: Up to the lesser of $2,500 per year per spouse or your Georgia income tax liability.
- Single or head of household: Up to the lesser $2,500 per year or or your Georgia income tax liability.
Individuals owning interests in pass through entities (such as ‘S’ corporations, LLC’s, and partnerships) are eligible for an enhanced tax credit of up to $25,000.
More information for owners of pass-through entities can be found here.
- ‘C’ corporation: Up to 75 percent of the estimated Georgia income tax liability.
- Fiduciaries (estates and taxable trusts): Up to 75 percent of the estimated Georgia income tax liability.
Under certain circumstances, unused credits can be carried forward for up to 5 years. Contact your tax professional for details.
The contribution process is described here.
No. The Georgia Department of Revenue has ruled that the rollover is not eligible for the education tax credit. For more information, contact your tax professional or the trustee/custodian of your IRA.
Yes, we take your privacy and the security of your personal data very seriously. E-mail addresses will not be sold, rented or leased to 3rd parties. The sensitive data you provided to us is used solely by GRACE. Your information is 1) encrypted in transit from you to us, 2) encrypted at rest while it stays on our server and 3) only decrypted at time of use. Always look for the HTTPS:// or Protecting Lock when accessing our TLS/SSL encrypted forms.
The tax year is the year that you make your donation to GRACE. Pre-registrations are usually submitted to GRACE the year before the tax year. Tax returns are filed the year after the tax year.
Here is an example:
Donor submits his/her pre-registration for a 2022 tax credit to GRACE in 2021.
Donor makes his/her donation to GRACE in 2022 – that is the tax year.
Donor files tax return with the Georgia Department of Revenue for 2022 in 2023.
Please note, as long as the cap remains open, donors can continue to register for the tax credit.
Donors have 60 days from the date of the approval letter to make their payments. The earliest that donors can make payments is on day one of the 60-day period. When the 60-day period expires, there are no extensions, and the tax credit is void.
I received an email from GRACE confirming my pre-registration. Does this mean that I have been approved for a tax credit by the Department of Revenue? When will I know my approval amount?
The confirmation e-mail means that you have provided GRACE with the information and authorization to apply for your tax credit to the Georgia Department of Revenue’s online portal. GRACE will apply for your tax credit with the DOR. The DOR has 30 days from the date of the request to notify the donor of approval.
Typically, taxpayers receive their approval letters with their approval amounts within a week to ten business days from the date of request.
No. The Georgia Department of Revenue has ruled that the charitable fund may not be used to pay for a tax credit for an individual (single or married) or a corporation. For more information, contact your tax professional or the trustee/custodian of your charitable fund.
GRACE accepts checks, credit card payments or stock donations. Click here for more information on ways to give.
Individual taxpayers (those filing as single, married filing separate or married filing jointly): If your Georgia income tax liability is at least as much as your GRACE contribution, your refund will increase by the amount of your donation. However, if your state income tax liability is less than your donation to GRACE, the amount of the unused credit can be carried forward for five years. C Corporations or owners of pass-through entities cannot carry-forward any education expense tax credits.
No. Georgia Department of Revenue Regulation 560-3-2-.26 requires electronic filing for income tax returns in which series 100 tax credits are claimed, utilized or included in any manner. This is necessary so that the Department’s systems can more efficiently process these returns.
Yes. As long as the other school has signed up to participate with an approved Student Scholarship Organization (SSO), you can designate a portion of your donation for that school. GRACE transfers those funds to the SSO affiliated with that school and notifies the SSO partner of the donor information. On the pre-registration form online, select other and type in the name of the school. On a paper form, write-in the name of the non-GRACE school.
GRACE provides tuition assistance to students with demonstrated financial need who wish to attend Georgia Catholic schools that participate in GRACE. Click here for a list of participating schools. You can also designate your contribution to the Board Choice (BC) or the Economically Disadvantaged Family Fund (EDFF), which serves the poorest of GRACE’s families and students. BC and EDFF funds are allocated to schools by the GRACE Board of Directors.