Georgia tax credit program helps stabilize finances of rural hospitals, though challenges remain

A nearly decade-old tax credit program has directed hundreds of millions of dollars to struggling rural hospitals in Georgia over the years, helping to stabilize their finances. But critics of the program, including those who advocate for full Medicaid expansion, say the program continues to fall short of giving Georgia’s hospitals the support they need […]

The audit found that although the law successfully supported struggling rural hospitals, it was limited in promoting economic growth and attracting donations from new sources. Jill Nolin/Georgia Recorder

A nearly decade-old tax credit program has directed hundreds of millions of dollars to struggling rural hospitals in Georgia over the years, helping to stabilize their finances.

But critics of the program, including those who advocate for full Medicaid expansion, say the program continues to fall short of giving Georgia’s hospitals the support they need to survive long term.

Georgia’s Rural Hospital Tax Credit program allows taxpayers to receive a 100% tax credit for donations made to eligible rural hospitals. A recently released state audit, conducted by the Fiscal Research Center at Georgia State University, found that the program was effective in supporting vulnerable hospitals, but it also found limitations regarding economic growth and its ability to increase the sources of new donations. 

While uptake of the tax credit lagged in the beginning, the report states that donations have nearly reached their statutory cap in recent years. Lawmakers capped the program at $100 million starting in 2025.

Jimmy Lewis, CEO of Hometown Health, which represents rural hospitals, said that the cost to the state is minimal compared to the economic benefit of supporting the state’s rural health care infrastructure.

“If we don’t provide vehicles like this to preserve economic development in rural Georgia, we’re going to accelerate to a third-world nation beyond anything we can imagine … we’ve got very problematic situations where we don’t have the money,” Lewis said. “Again, these hospitals were built in the mid-50s and haven’t been totally upgraded since then, and as a result, we’ve got a real infrastructure problem.”

Since its start in 2017, the program has generated more than $432 million in support for rural hospitals statewide, according to the audit.

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The audit also noted a shift in the main source of donations, which previously came from individuals but has increasingly rolled in from businesses and corporations.

“This program was able to let millions of dollars flow directly to rural hospitals, and in return, they could serve the needs of their community the way they needed to, whether it was to buy more equipment, be able to pay doctors and nurses and technicians more, to be competitive,” former Lt. Gov. Geoff Duncan, who sponsored the bill that created the program nearly a decade ago as a Republican state representative, said in an interview. Duncan is a 2026 candidate for governor who is now running for the Democratic ticket.

Despite the program’s cost, Duncan said it is essential and should be expanded. If elected governor, Duncan said he would support doubling the cap on the amount of state funding set aside for the program, raising it from $100 million to $200 million.

“Many of these huge contributions from companies are coming from the largest employer in that community or in that region,” Duncan said. “No business wants to ask hundreds of people to show up to work every day without a rural hospital being viable within a short ambulance ride if something unforeseen happens.”

Past critics of the program said that despite the program’s success as a lifeline for cash-strapped hospitals, it is not enough to address the lack of health care access, particularly in rural Georgia.

Leah Chan, director of health justice at Georgia Budget and Policy Institute, said that while the tax credit helps, it “comes nowhere near to solving the scale of the problem.” She pointed to looming challenges posed by the new federal law known as the One Big Beautiful Bill Act, which will reduce federal funding for health services over the next decade.

“I think what this audit shows is that it has generated more than $432 million in support for rural hospitals statewide,” Chan said. “So that is certainly a benefit. Again, no one solution is going to fix all our problems, and we need to access additional levers that allow us to draw down additional federal funds and to ensure we can cover more eligible Georgians.”

These federal cuts will “gut Georgia’s rural providers and communities,” said Natalie Crawford, the executive director of Georgia First and a former Republican commissioner in Habersham County. She said that with $626 million in federal financing cuts for rural hospitals and nearly 100,000 rural Georgians losing their insurance, referencing a recent study from Georgia Health Initiative, the state needs to consider more permanent solutions, such as full Medicaid expansion. Duncan, who was previously opposed to Medicaid expansion as a Republican, also pointed to the federal program as a potential solution.

“Band-Aids like this program aren’t going to save our rural health system from the coming pressures that, if not addressed, will generate a full-blown crisis for our state,” Crawford said.