Rural hospitals have faced financial challenges due in part to many patients being uninsured or indigent with a number of these hospitals going bankrupt. In an effort to encourage donations to Georgia rural hospitals, Governor Nathan Deal has signed a tax credit bill effective for tax years beginning on or after January 1, 2017, providing a Georgia tax credit to taxpayers who contribute to a qualifying rural healthcare facility that use the donations for healthcare services.
This new legislation encourages financial help for these struggling facilities which must be a nonprofit and must treat patients who are indigent or on Medicaid or Medicare. The health care facility must be located in a rural county with a population under 35,000 excluding military personnel if a base is located in that county.
The tax credit for individuals is up to 70 percent of the contribution amount or $2,500, whichever is less. For married taxpayers, the credit is the lesser of 70 percent of the contribution or $5,000. Businesses will earn a credit not to exceed the lesser of 70 percent of the amount contributed or 75 percent of their state income tax liability. An individual seeking a maximum credit of $2,500 would require a contribution of $3,572 and for married couples seeking a maximum credit of $5,000 would require a donation of $7,143. Based on the requirements of the recipient entity to be a 501(c)(3) organization or operated by a county/municipal authority, the donation should be deductible as a charitable contribution for federal tax purposes.
Taxpayers seeking the credit will be required to apply for pre-approval of the donation from the State. For the first year, the credits are capped at $50 million, with a $10 million increase over the next two years. The tax credits are set to expire in 2019. Unused credits may carry forward for five years.