Rural Hospital State Tax Credits with One Goal

Georgia, Alabama and other states offer tax incentives to benefit rural hospitals, with key distinctions between programs.

By: Frank Auberle, CPA and Ross Cannon, CPA

Alabama recently launched its Rural Hospital Investment Tax Credit, much to the relief of healthcare leaders in the state, but it’s not the only program of its type in the region. Other states are implementing similar programs. Just across the border from Alabama, Georgia’s Rural Hospital Tax Credit benefits rural healthcare facilities in the state. If you or your business owes taxes in Georgia, Alabama, or both, you should be familiar with the key similarities and differences between these tax incentives. But if you don’t owe tax in either, there’s likely a similar credit in the states where you do have obligations, so be sure to explore what’s available.

These programs direct much-needed revenue to struggling healthcare facilities that deliver essential healthcare services for residents of Alabama and Georgia, especially those who live outside metropolitan areas. While the two state-level programs have much in common, they’re not identical. Here’s a quick rundown of how Georgia’s Rural Hospital Tax Credit and Alabama’s Rural Hospital Investment Tax Credit compare. 

Program Dates

Georgia’s RHITC first became available in 2017 and continues as an ongoing part of the state’s tax code, while Alabama’s RHITC made its debut in 2026. Alabama legislators have approved the program for tax years 2026, 2027, and 2028, but many experts hope to see it extended longer.

Tax Benefits

Both programs deliver a credit against certain state tax liabilities, with 100% of the amount applied to participants’ state tax bill. However, RHITC can offset state income, excise, insurance premium and utility tax obligations, while the RHTC can only reduce taxpayers’ Georgia state income tax liability.

Eligibility

Individuals, trusts, C-corporations and owners of pass-through businesses can take part in RHITC after obtaining approval by the Georgia Department of Revenue. In Alabama, RHITC is available to individuals and all types of businesses.

Donor Limits

Alabama taxpayers can claim RHITC in the following amounts:

• Up to $15,000 for individuals filing single, head of household or married filing separately.
• Up to $30,00 for married individuals filing jointly.
• Up to $450,000 for passthrough entities.
• Up to $500,000 for corporations based on 100% of the amount of the donation or 75% of income tax liability, whichever is less.
• Up to $500,000 for financial institutions based on 100% of the amount of the donation or 75 % of the institution’s Alabama excise tax liability, whichever is less.
• Up to $500,000 for insurance companies based on 100% of the amount of the donation or 75% of the company’s insurance premium tax liability, whichever is less.
• For utility taxpayers with a utility tax direct pay permit, the lesser of 100% of the amount of the donation or the total utility taxes paid. 

In Georgia, the limits change halfway through the year. Before June 30:

• Single filers can claim up to $5,000.
• Married individuals filing jointly can claim up to $10,000.
• Owners of pass-through businesses can claim up to $25,000 if they are not paying tax at the entity level.
• Owners of pass-through businesses who are paying state tax at the entity level can claim up to 75% of their Georgia income tax liability, as can C-corporations.

After June 30, the limits for some taxpayers change, but only if there’s still room under the state’s $100 million aggregate annual cap on RHTC availability. Assuming credits remain available, individual filers and owners of passthrough entities can participate up to the amount of their Georgia state income tax liability.

Aggregate Caps

Georgia imposes an annual program cap of $100 million in 2026. Alabama’s program cap is $20 million in 2026, rising to $25 million in 2027 and $30 million in 2028 (and theoretical future program years). 

Hospital Caps

Each eligible Alabama facility can receive up to $750,000 in 2026, $1 million in 2027 and $1.25 in future years. Eligible Georgia rural hospitals in Georgia can receive up to $4 million.

Purpose of Funds

Approved Alabama hospitals can use their RHITC funds on direct patient care, facility upgrades and maintenance. In Georgia, facilities that receive RHTC revenue are free to direct program funds toward capital expenses, staffing, equipment, debt reduction and expanding services. 

Don’t Miss Out 

Our state and local tax (SALT) experts can help you determine eligibility and claim rural hospital tax credits as well as many other valuable state-level tax incentives in Georgia, Alabama and nationwide. Reach out today and discover how we can help you lower your tax bill whatever your tax footprint looks like.