(GEORGIA, USA) — The Georgia Senate passed Senate Bill 476 on February 12, 2026, voting 32-18 to advance a plan to phase out the state’s affordable housing tax credit as part of a broader income-tax cut push.
Lawmakers titled the measure the “Income Tax Reduction Act of 2026,” and the bill pairs income-tax reductions with limits on several corporate tax credits, including the Georgia affordable housing tax credit tied to qualified low-income housing projects.
The vote in the Georgia Senate set up a new fight in the Georgia House over how quickly the state should narrow a financing tool used in many affordable rental developments, at a time when opponents say Georgia faces a shortage of low-income units.
SB 476 amends Titles 33 and 48 of the Official Code of Georgia Annotated, combining changes that affect tax rates with a restructuring of how certain credits work against specific state tax liabilities.
At the center of the housing debate is the Georgia affordable housing tax credit, a state credit linked to the federal low-income housing tax credit framework under Section 42 of the Internal Revenue Code, which developers and investors commonly use to help finance income-restricted apartments.
In practice, LIHTC-style developments often rely on stacked sources of financing, and the state credit can help close gaps that remain after rents are set below market levels for eligible households.
SB 476 creates two tracks for the Georgia affordable housing tax credit depending on when initial applications are received by the Department of Community Affairs, with a sharper reduction for later filings.
For initial applications received before January 1, 2027, the bill keeps the Georgia credit aligned with the federal housing tax credit under Section 42 of the Internal Revenue Code.
For applications on or after January 1, 2027, SB 476 caps the state credit at 50% of the federal credit, and it adds a combined-credit limit so that the credit, when combined with credits under Code Section 33-1-18, cannot exceed that amount.
The bill also narrows the credit’s operation by specifying the taxes it applies to under Code Sections 33-5-31, 33-8-4, and 33-40-5, and it ties eligibility to projects placed in service after January 1, 2001.
SB 476 defines qualifying developments as qualified low-income housing projects in Georgia with at least 20% of units for households at 50% or less of median income, a minimum set-aside concept that mirrors common affordability thresholds in LIHTC-related underwriting.
That design matters for project feasibility, because a lower state credit after the cutoff date can change the amount of equity a development raises, potentially widening the gap between construction costs and what restricted rents can support.
Supporters of the bill frame the housing-credit changes as part of a broader move to shift Georgia’s tax policy toward lower income-tax burdens, while critics argue the change risks shrinking the pipeline of new income-restricted apartments.
Democrats, including Sen. Nabilah Islam Tillery, criticized the cuts amid affordability concerns, arguing they fail to address housing needs.
Affordable housing advocates warned the change could halt projects and exacerbate Georgia’s low-income unit shortage, linking the credit reduction to fewer viable deals, particularly where financing already depends on multiple layers of public and private capital.
Sen. John Albers (R-Roswell) defended the bill as a major middle-class relief for property taxes, groceries, and family expenses, placing the measure in a wider argument that income-tax cuts deliver broad-based benefits.
The bill’s structure also reflects a wider legislative push to reduce or revisit credits that operate without sunset dates, setting up disputes about whether trimming incentives saves money, shifts burdens, or changes investment patterns across industries.
Beyond housing, SB 476 accelerates income tax cuts to 4.99% per Gov. Brian Kemp’s recommendation, a rate target supporters cite as a step toward lowering the overall tax bite for individuals and families.
The bill eliminates state income taxes on the first $50,000 of individual earnings or $100,000 for married couples, a change it says affects about two-thirds of Georgians.
SB 476 also requires reevaluation of income tax credits without sunset dates, a provision that broadens the measure beyond a single industry and signals further review of tax preferences over time.
Alongside the affordable-housing changes, it cuts other credits, including those for data centers, insurance companies, banks, tobacco exports, yacht parts, and COVID-19-related equipment.
That breadth ties the affordable housing tax credit debate to a bigger question in Georgia tax policy: whether lawmakers should trade targeted credits for lower rates and broader tax relief, or preserve incentives aimed at specific public goals such as housing production.
SB 476 moved quickly through the Senate in less than a week, according to the legislative timeline in the bill history.
The bill entered the Senate hopper on February 6, 2026, and the Senate read and referred it on February 9, 2026.
A Senate committee favorably reported the bill on February 10, 2026, and the Senate read it a second time on February 11, 2026.
On February 12, 2026, the Senate engrossed the bill, gave it a third read, and passed it with Yeas: 32, Nays: 18, Present/Not Voting: 3, Absent: 3.
After Senate passage, SB 476 moved to the Georgia House for consideration, where lawmakers can approve the measure, change it, or amend its transition rules and credit mechanics.
House debate is likely to focus on how SB 476 handles timing and pipeline risk, because the bill draws a bright line at January 1, 2027 for when initial applications reach the Department of Community Affairs.
Developers and investors commonly plan projects months or years ahead, and the filing date can shape whether financing assumptions hold when a project seeks final commitments, construction loans, and equity pricing.
Supporters can point to the bill’s pre-2027 treatment as a transition period that preserves full alignment with the federal credit for applications received before January 1, 2027.
Opponents can argue that the post-2027 cap at 50% of the federal credit will lower proceeds for later applications and could reduce the number of developments that can close financing, particularly when construction costs rise faster than rents in income-restricted housing.
The interaction with Code Section 33-1-18 also adds complexity, because SB 476 bars the affordable housing credit, when combined with credits under that code section, from exceeding the capped amount for applications on or after January 1, 2027.
That combined-credit limitation can matter most for entities that manage multiple credit streams, and it can influence how deals are structured, how investors value the credits, and how sponsors prioritize among projects.
The bill’s language on what qualifies as a low-income housing project in Georgia also anchors the debate in tenant income targeting, requiring at least 20% of units for households at 50% or less of median income.
That standard, which aligns with common LIHTC rules, is often used to support stable housing for working households whose wages do not keep up with market rents, particularly in areas where rents increase faster than incomes.
Housing advocates argue that cutting the state credit can limit the supply of units produced under these rules, because the credit helps fill gaps that remain even when the federal credit provides significant support.
Supporters counter that the bill aims to deliver broader relief through income-tax cuts, and they argue lawmakers should prioritize statewide rate reductions over industry-specific credits.
The arguments land amid day-to-day pressures on renters and would-be renters, as well as local debates over housing supply, affordability, and the public role in encouraging construction of below-market units.
For immigrant and mixed-status households, LIHTC-style developments can serve as one of the more consistent sources of stable housing because they create apartments with rents set by program rules rather than by rapid shifts in the private market.
Tenant eligibility rules can vary when properties layer other subsidies on top of LIHTC-style financing, which can make the composition of a given development depend on how the project assembles its full stack of funding.
That variability means the credit’s future in Georgia can affect both the number of units built and the kinds of developments sponsors pursue, including whether projects combine the state credit with other financing tools.
By placing the affordable housing tax credit inside a bill branded as an income-tax reduction measure, SB 476 also links housing finance to the larger political push to accelerate tax cuts and review credits that do not automatically expire.
In the House, lawmakers will weigh whether the state should keep the current approach longer, soften the 50% cap, change the cutoff date, adjust how combined credits are calculated, or alter the transition for applications already in motion.
Stakeholders will also watch how the state implements any new rules if the bill becomes law, including how agencies interpret filing timing and how they administer credits against the taxes listed in the measure.
For now, Senate Bill 476’s rapid Senate passage has shifted attention to the House, where the next votes will determine whether Georgia’s affordable housing tax credit continues to mirror the federal model after January 1, 2027 or enters a new, capped era under the “Income Tax Reduction Act of 2026.”
Georgia Senate Moves Senate Bill 476 to Sunset Affordable Housing Tax Credit
Georgia’s Senate has approved a major tax overhaul that pairs income tax reductions with a phase-out of the state’s affordable housing tax credit. Starting in 2027, the state credit for new low-income housing projects will be capped at half the federal rate. While the bill promises broad financial relief for families, housing advocates argue it will severely limit the construction of much-needed income-restricted apartment units.
