Income tax; implement pilot program authorizing credit for educational expenses, awarded by lottery system.

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To: Finance
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Senator(s) Hill

SENATE BILL NO. 3118

AN ACT TO AUTHORIZE AN INCOME TAX CREDIT FOR ELIGIBLE 1
EDUCATIONAL EXPENSES PAID BY A PARENT OR LEGAL GUARDIAN ON BEHALF 2
OF A DEPENDENT K-12 STUDENT; TO SPECIFY A MAXIMUM AMOUNT OF THE 3
CREDIT PER STUDENT; TO PROVIDE THAT ANY UNUSED PORTION OF THE 4
CREDIT MAY BE CARRIED FORWARD FOR THE FIVE SUCCEEDING TAX YEARS; 5
TO PROVIDE THAT THE AMOUNT OF THE CREDIT THAT MAY BE UTILIZED IN 6
ANY TAX YEAR SHALL NOT EXCEED THE TOTAL STATE INCOME TAX LIABILITY 7
OF THE TAXPAYER FOR THAT YEAR; TO PROVIDE THAT THE AGGREGATE 8
AMOUNT OF TAX CREDITS THAT MAY BE AWARDED UNDER THIS SECTION IN 9
ANY CALENDAR YEAR SHALL NOT EXCEED $20,000,000.00; TO PRESCRIBE 10
THE CONTENT REQUIRED IN THE APPLICATION FOR THE CREDIT; TO PROVIDE 11
THAT THE DEPARTMENT SHALL ESTABLISH A LOTTERY SYSTEM FOR SELECTING 12
TAXPAYERS TO BE AWARDED THE CREDIT; TO AUTHORIZE THE DEPARTMENT OF 13
REVENUE TO PROMULGATE REGULATIONS AS NEEDED TO ADMINISTER THIS 14
ACT; TO SPECIFY THAT THIS ACT CREATES A PILOT PROGRAM AND THAT NO 15
CREDITS SHALL BE AUTHORIZED UNDER THIS ACT FOR ELIGIBLE EXPENSES 16
INCURRED IN ANY CALENDAR YEAR OTHER THAN 2026; AND FOR RELATED 17
PURPOSES. 18
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 19
SECTION 1. (1) As used in this section: 20
(a) "Eligible expenses" means expenses paid by a parent 21
or legal guardian of a dependent student, from a source other than 22
Education Savings Account (ESA) funds, for: 23
(i) Tuition paid to an accredited private school; 24
(ii) Textbooks and instructional materials 25
required for school or private instruction; 26
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(iii) Required school supplies and materials; 27
(iv) Fees for school-sponsored activities; or 28
(v) Driver's education and similar fees paid 29
through the school. 30
(b) "Student" means a pupil in kindergarten through 31
grade 12 in a public school, private school, or legitimate home 32
instruction program. 33
(2) There shall be allowed as a credit against the taxes 34
imposed by Section 27-7-5 an amount equal to a taxpayer's eligible 35
expenses for each student. The amount of the credit per student 36
shall not exceed Two Thousand Five Hundred Dollars ($2,500.00) in 37
any calendar year. 38
(3) Any credit claimed under this section but not used in 39
any tax year may be carried forward for five (5) consecutive years 40
from the close of the tax year in which the credit was earned. 41
The credit that may be utilized in any tax year shall be limited 42
to an amount not greater than the total state income tax liability 43
of the taxpayer for that year. 44
(4) The aggregate amount of tax credits that may be awarded 45
under this section in any calendar year shall not exceed Twenty 46
Million Dollars ($20,000,000.00). 47
(5) A taxpayer shall apply for credits with the department 48
on forms prescribed by the department. In the application, the 49
taxpayer shall itemize and provide documentation for the eligible 50
expenses for each dependent student. The department shall 51
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ST: Income tax; implement pilot program
authorizing credit for educational expenses,
awarded by lottery system.
establish a lottery system for selecting taxpayers to be awarded 52
the credit. The selection shall be made according to taxpayer, 53
not according to student, but the system shall be implemented so 54
that the maximum aggregate amount of tax credits to be awarded in 55
any calendar year shall not be exceeded. The lottery shall be 56
conducted in the calendar year after the eligible expenses were 57
incurred, and the credit shall be awarded for the calendar year 58
after the lottery. 59
(6) The department may promulgate regulations as needed to 60
administer this section. 61
(7) This section creates a pilot program, and no credits 62
shall be authorized under this section for eligible expenses 63
incurred in any calendar year other than 2026. 64
SECTION 2. Section 1 of this act shall be codified in 65
Article 1, Chapter 7, Title 27, Mississippi Code of 1972. 66
SECTION 3. This act shall take effect and be in force from 67
and after January 1, 2026. 68