Authorizes an income tax credit for donations to certain public schools. (1/1/26) (EN -$1,000,000 GF RV See Note)
SB 123 creates a new Louisiana income tax credit for taxpayers who donate to public schools that received a D or F on the most recent Louisiana School and District Accountability System. The credit equals 95% of the donation amount for qualifying schools, while donations to schools rated A, B, or C do not qualify. The bill limits eligible uses of the donated funds to instructional materials, tutoring programs, in-school child care for student parents, school-based health clinics, and other costs tied to requirements for academically unacceptable schools.
The bill also establishes administrative rules for the program. Public schools must issue standardized receipts showing the donation amount, the school’s letter grade, and a certification that the money will be used for an authorized purpose. Schools receiving qualifying donations must file an annual CPA-prepared report with the Department of Revenue and the Department of Education, including donor-identifying information and donation totals. Taxpayers must apply electronically for the credit, and the Department of Revenue must administer the credit on a first-come, first-served basis with pro rata allocation if requests exceed available credits.
The fiscal note indicates the program is capped at $1 million in credits per calendar year, and the credit is available only for taxable periods beginning on or after January 1, 2026. No credits may be earned for taxable periods beginning on or after January 1, 2028, so the program is temporary unless extended by later legislation. The act becomes effective January 1, 2026.
Overall, the bill appears to have broad support based on the recorded votes: it passed the Senate 38-0, the House 78-16, and the Senate concurred 38-0. The vote pattern suggests general agreement with the goal of directing private donations toward lower-performing public schools, though the House vote shows some opposition. No committee transcript was provided, so specific debate points are not available, but likely areas of concern include the tax expenditure cost, the narrow benefit to only D/F schools, the administrative reporting burden, and the privacy implications of reporting donor information to state agencies.
SB 123 adds R.S. 47:6302 to Louisiana tax law and creates a new refundable-style income tax credit structure tied to charitable donations to public schools with D or F accountability grades. It affects taxpayers who file Louisiana income tax returns, qualifying public schools, the Department of Revenue, and the Department of Education. The measure also imposes reporting, receipt, and application requirements on schools and donors, and it limits the state fiscal exposure through a $1 million annual credit cap and a sunset on earning credits after the 2027 tax period.
The overall sentiment around SB 123 is favorable. The bill cleared the Senate unanimously and the final concurrence vote was also unanimous in the Senate, indicating strong support in that chamber. The House passed it by a substantial margin as well, though with 16 no votes, suggesting some reservations but not broad opposition. In the absence of committee testimony, the voting record is the best indicator that lawmakers generally viewed the bill as a targeted education-support measure.
The main points of contention likely center on policy design and administration rather than the concept of supporting schools. Critics may object that the credit directs public subsidy only to schools already rated D or F, potentially excluding higher-performing schools and limiting flexibility. Others may question the 95% credit rate and the $1 million annual cap as a tax expenditure, as well as the requirement that schools report donor names and identifying information to state agencies, which raises privacy and compliance concerns. Supporters likely emphasize that the bill channels private donations to academically struggling schools for tutoring, materials, and student support services.