Income tax and ad valorem tax; increase limit on amount of credits that may be allocated for certain contributions to certain charitable and foster care organizations.

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To: Ways and Means
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative Blackwell

HOUSE BILL NO. 395

AN ACT TO AMEND SECTION 27-7-22.39, MISSISSIPPI CODE OF 1972, 1
TO INCREASE THE AMOUNT OF INCOME TAX CREDITS AND AD VALOREM TAX 2
CREDITS THAT MAY BE ALLOCATED BY THE DEPARTMENT OF REVENUE DURING 3
A CALENDAR YEAR FOR VOLUNTARY CASH CONTRIBUTIONS BY INDIVIDUAL 4
TAXPAYERS TO QUALIFYING CHARITABLE ORGANIZATIONS AND TO QUALIFYING 5
FOSTER CARE CHARITABLE ORGANIZATIONS; AND FOR RELATED PURPOSES. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 7
SECTION 1. Section 27-7-22.39, Mississippi Code of 1972, is 8
amended as follows: 9
27-7-22.39. (1) As used in this section: 10
(a) "Low-income residents" means persons whose 11
household income is less than one hundred fifty percent (150%) of 12
the federal poverty level. 13
(b) "Qualifying charitable organization" means a 14
charitable organization that is exempt from federal income 15
taxation under Section 501(c)(3) of the Internal Revenue Code or 16
is a designated community action agency that receives community 17
services block grant program monies pursuant to 42 USC 9901. The 18
organization must spend at least fifty percent (50%) of its budget 19
on services to residents of this state who receive temporary 20
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assistance for needy families benefits or low-income residents of 21
this state and their households or to children who have a chronic 22
illness or physical, intellectual, developmental or emotional 23
disability who are residents of this state. A charitable 24
organization that is exempt from federal income tax under Section 25
501(c)(3) of the Internal Revenue Code and that meets all other 26
requirements of this paragraph except that it does not spend at 27
least fifty percent (50%) of its overall budget in Mississippi may 28
be a qualifying charitable organization if it spends at least 29
fifty percent (50%) of its Mississippi budget on services to 30
qualified individuals in Mississippi and it certifies to the 31
department that one hundred percent (100%) of the voluntary cash 32
contributions from the taxpayer will be spent on services to 33
qualified individuals in Mississippi. Taxpayers choosing to make 34
donations through an umbrella charitable organization that 35
collects donations on behalf of member charities shall designate 36
that the donation be directed to a member charitable organization 37
that would qualify under this section on a stand-alone basis. 38
Qualifying charitable organization does not include any entity 39
that provides, pays for or provides coverage of abortions or that 40
financially supports any other entity that provides, pays for or 41
provides coverage of abortions. 42
(c) "Qualifying foster care charitable organization" 43
means a qualifying charitable organization that each operating 44
year provides services to at least one hundred (100) qualified 45
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individuals in this state and spends at least fifty percent (50%) 46
of its budget on services to qualified individuals in this state. 47
A charitable organization that is exempt from federal income tax 48
under Section 501(c)(3) of the Internal Revenue Code and that 49
meets all other requirements of this paragraph except that it does 50
not spend at least fifty percent (50%) of its overall budget in 51
Mississippi may be a qualifying foster care charitable 52
organization if it spends at least fifty percent (50%) of its 53
Mississippi budget on services to qualified individuals in 54
Mississippi and it certifies to the department that one hundred 55
percent (100%) of the voluntary cash contributions from the 56
taxpayer will be spent on services to qualified individuals in 57
Mississippi. For the purposes of this paragraph, "qualified 58
individual" means a child in a foster care placement program 59
established by the Department of Child Protection Services, a 60
child placed under the Safe Families for Children model, or a 61
child at significant risk of entering a foster care placement 62
program established by the Department of Child Protection 63
Services. 64
(d) "Services" means: 65
(i) Cash assistance, medical care, child care, 66
food, clothing, shelter, and job-placement services or any other 67
assistance that is reasonably necessary to meet immediate basic 68
needs and that is provided and used in this state; 69
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(ii) Job-training or education services or funding 70
for parents, foster parents or guardians; or 71
(iii) Job-training or education services or 72
funding provided as part of a foster care independent living 73
program. 74
(2) (a) Except as provided in subsections (3) and (4) of 75
this section, a credit is allowed against the taxes imposed by 76
this chapter for voluntary cash contributions by the taxpayer 77
during the taxable year to a qualifying charitable organization, 78
other than a qualifying foster care charitable organization, not 79
to exceed: 80
(i) Through calendar year 2022, the lesser of Four 81
Hundred Dollars ($400.00) or the amount of the contribution in any 82
taxable year for a single individual or a head of household; and 83
for calendar year 2023 and each calendar year thereafter, the 84
lesser of One Thousand Two Hundred Dollars ($1,200.00) or the 85
amount of the contribution in any taxable year for a single 86
individual or a head of household. 87
(ii) Through calendar year 2022, the lesser of 88
Eight Hundred Dollars ($800.00) or the amount of the contribution 89
in any taxable year for a married couple filing a joint return; 90
and for calendar year 2023 and each calendar year thereafter, the 91
lesser of Two Thousand Four Hundred Dollars ($2,400.00) or the 92
amount of the contribution in any taxable year for a married 93
couple filing a joint return. 94
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(b) From and after January 1, 2023, a credit is also 95
allowed against ad valorem taxes assessed and levied on real 96
property for voluntary cash contributions made by the individual 97
taxpayer during the taxable year to a qualifying charitable 98
organization, other than a qualifying foster care charitable 99
organization. The amount of credit that may be utilized by a 100
taxpayer in a taxable year shall be limited to an amount not to 101
exceed fifty percent (50%) of the total tax liability of the 102
taxpayer for ad valorem taxes assessed and levied on real 103
property. Any tax credit claimed under this paragraph but not 104
used in any taxable year may be carried forward for five (5) 105
consecutive years from the close of the tax year in which the 106
credits were earned. 107
(3) (a) A separate credit is allowed against the taxes 108
imposed by this chapter for voluntary cash contributions during 109
the taxable year to a qualifying foster care charitable 110
organization. A contribution to a qualifying foster care 111
charitable organization does not qualify for, and shall not be 112
included in, any credit amount under subsection (2) of this 113
section. If the voluntary cash contribution by the taxpayer is to 114
a qualifying foster care charitable organization, the credit shall 115
not exceed: 116
(i) Through calendar year 2022, the lesser of Five 117
Hundred Dollars ($500.00) or the amount of the contribution in any 118
taxable year for a single individual or a head of household; and 119
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for calendar year 2023 and each calendar year thereafter, the 120
lesser of One Thousand Five Hundred Dollars ($1,500.00) or the 121
amount of the contribution in any taxable year for a single 122
individual or a head of household. 123
(ii) Through calendar year 2022, the lesser of One 124
Thousand Dollars ($1,000.00) or the amount of the contribution in 125
any taxable year for a married couple filing a joint return; and 126
for calendar year 2023 and each calendar year thereafter, the 127
lesser of Three Thousand Dollars ($3,000.00) or the amount of the 128
contribution in any taxable year for a married couple filing a 129
joint return. 130
(b) From and after January 1, 2023, a credit is also 131
allowed against ad valorem taxes assessed and levied on real 132
property for voluntary cash contributions made by the individual 133
taxpayer during the taxable year to a qualifying foster care 134
charitable organization. The amount of credit that may be 135
utilized by a taxpayer in a taxable year shall be limited to an 136
amount not to exceed fifty percent (50%) of the total tax 137
liability of the taxpayer for ad valorem taxes assessed and levied 138
on real property. Any tax credit claimed under this paragraph but 139
not used in any taxable year may be carried forward for five (5) 140
consecutive years from the close of the tax year in which the 141
credits were earned. 142
(4) Subsections (2) and (3) of this section provide separate 143
credits against taxes imposed by this chapter depending on the 144
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recipients of the contributions. A taxpayer, including a married 145
couple filing a joint return, in the same taxable year, may either 146
or both: 147
(a) Contribute to a qualifying charitable organization, 148
other than a qualifying foster care charitable organization, and 149
claim a credit under subsection (2) of this section. 150
(b) Contribute to a qualifying foster care charitable 151
organization and claim a credit under subsection (3) of this 152
section. 153
(5) A husband and wife who file separate returns for a 154
taxable year in which they could have filed a joint return may 155
each claim only one-half (1/2) of the tax credit that would have 156
been allowed for a joint return. 157
(6) Except as otherwise provided in subsections (2) and (3) 158
of this section, if the allowable tax credit exceeds the taxes 159
otherwise due under this chapter on the claimant's income, or if 160
there are no taxes due under this chapter, the taxpayer may carry 161
forward the amount of the claim not used to offset the taxes under 162
this chapter for not more than five (5) consecutive taxable years' 163
income tax liability. 164
(7) The credit allowed by this section is in lieu of a 165
deduction pursuant to Section 170 of the Internal Revenue Code and 166
taken for state tax purposes. 167
(8) Taxpayers taking a credit authorized by this section 168
shall provide the name of the qualifying charitable organization 169
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and the amount of the contribution to the department on forms 170
provided by the department. 171
(9) A qualifying charitable organization shall provide the 172
department with a written certification that it meets all criteria 173
to be considered a qualifying charitable organization. The 174
organization shall also notify the department of any changes that 175
may affect the qualifications under this section. 176
(10) The charitable organization's written certification 177
must be signed by an officer of the organization under penalty of 178
perjury. The written certification shall include the following: 179
(a) Verification of the organization's status under 180
Section 501(c)(3) of the Internal Revenue Code or verification 181
that the organization is a designated community action agency that 182
receives community services block grant program monies pursuant to 183
42 USC 9901. 184
(b) Financial data indicating the organization's budget 185
for the organization's prior operating year and the amount of that 186
budget spent on services to residents of this state who either: 187
(i) Receive temporary assistance for needy 188
families benefits; 189
(ii) Are low-income residents of this state; 190
(iii) Are children who have a chronic illness or 191
physical, intellectual, developmental or emotional disability; or 192
(iv) Are children in a foster care placement 193
program established by the Department of Child Protection 194
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Services, children placed under the Safe Families for Children 195
model or children at significant risk of entering a foster care 196
placement program established by the Department of Child 197
Protection Services. 198
(c) A statement that the organization plans to continue 199
spending at least fifty percent (50%) of its budget on services to 200
residents of this state who receive temporary assistance for needy 201
families benefits, who are low-income residents of this state, who 202
are children who have a chronic illness or physical, intellectual, 203
developmental or emotional disability or who are children in a 204
foster care placement program established by the Department of 205
Child Protection Services, children placed under the Safe Families 206
for Children model or children at significant risk of entering a 207
foster care placement program established by the Department of 208
Child Protection Services. A charitable organization that is 209
exempt from federal income tax under Section 501(c)(3) of the 210
Internal Revenue Code and that meets all other requirements for a 211
qualifying charitable organization or qualifying foster care 212
charitable organization except that it does not spend at least 213
fifty percent (50%) of its overall budget in Mississippi shall 214
submit a statement that it spends at least fifty percent (50%) of 215
its Mississippi budget on services to qualified individuals in 216
Mississippi and that one hundred percent (100%) of the voluntary 217
cash contributions it receives from Mississippi taxpayers will be 218
spent on services to qualified individuals in Mississippi. 219
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(d) In the case of a foster care charitable 220
organization, a statement that each operating year it provides 221
services to at least one hundred (100) qualified individuals in 222
this state. 223
(e) A statement that the organization does not provide, 224
pay for or provide coverage of abortions and does not financially 225
support any other entity that provides, pays for or provides 226
coverage of abortions. 227
(f) Any other information that the department requires 228
to administer this section. 229
(11) The department shall review each written certification 230
and determine whether the organization meets all the criteria to 231
be considered a qualifying charitable organization and notify the 232
organization of its determination. The department may also 233
periodically request recertification from the organization. The 234
department shall compile and make available to the public a list 235
of the qualifying charitable organizations. 236
(12) The aggregate amount of tax credits that may be awarded 237
under this section in any calendar year shall not exceed Three 238
Million Dollars ($3,000,000.00). However, for calendar year 2021, 239
and for each calendar year thereafter through calendar year 2025, 240
the aggregate amount of tax credits that may be awarded under this 241
section in any calendar year shall not exceed One Million Dollars 242
($1,000,000.00), and for calendar year 2026, and for each calendar 243
year thereafter, the aggregate amount of tax credits that may be 244
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awarded under this section in any calendar year shall not exceed 245
Three Million Dollars ($3,000,000.00). In addition, any tax 246
credits not awarded under this section before June 1, 2020, may be 247
allocated during calendar year 2020 under Section 27-7-22.41 for 248
contributions by taxpayers to eligible charitable organizations 249
described in Section 27-7-22.41(1)(b)(ii) as provided under such 250
section, notwithstanding any limitation on the percentage of tax 251
credits that may be allocated for such contributions. 252
(13) A taxpayer shall apply for credits with the department 253
on forms prescribed by the department. In the application the 254
taxpayer shall certify to the department the dollar amount of the 255
contributions made or to be made during the calendar year. Within 256
thirty (30) days after the receipt of an application, the 257
department shall allocate credits based on the dollar amount of 258
contributions as certified in the application. However, if the 259
department cannot allocate the full amount of credits certified in 260
the application due to the limit on the aggregate amount of 261
credits that may be awarded under this section in a calendar year, 262
the department shall so notify the applicant within thirty (30) 263
days with the amount of credits, if any, that may be allocated to 264
the applicant in the calendar year. Once the department has 265
allocated credits to a taxpayer, if the contribution for which a 266
credit is allocated has not been made as of the date of the 267
allocation, then the contribution must be made not later than 268
sixty (60) days from the date of the allocation. If the 269
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ST: Income tax and ad valorem tax; increase
limit on amount of credits that may be allocated
for certain contributions to certain charitable
and foster care organizations.
contribution is not made within such time period, the allocation 270
shall be cancelled and returned to the department for 271
reallocation. Upon final documentation of the contributions, if 272
the actual dollar amount of the contributions is lower than the 273
amount estimated, the department shall adjust the tax credit 274
allowed under this section. 275
SECTION 2. Nothing in this act shall affect or defeat any 276
claim, assessment, appeal, suit, right or cause of action for 277
taxes due or accrued under the income tax laws or ad valorem tax 278
laws before the date on which this act becomes effective, whether 279
such claims, assessments, appeals, suits or actions have been 280
begun before the date on which this act becomes effective or are 281
begun thereafter; and the provisions of the income tax laws and ad 282
valorem tax laws are expressly continued in full force, effect and 283
operation for the purpose of the assessment, collection and 284
enrollment of liens for any taxes due or accrued and the execution 285
of any warrant under such laws before the date on which this act 286
becomes effective, and for the imposition of any penalties, 287
forfeitures or claims for failure to comply with such laws. 288
SECTION 3. This act shall take effect and be in force from 289
and after January 1, 2026. 290