Passed 2013 • Launched 2013 • Individual Tax Credit
Alabama provides a tax credit or rebate to parents who transfer their children enrolled in or assigned to a failing public school to a non-failing public or private school of their choice.
Latest Stats (2014)
- Taxpayers participating: N.A.
- Average tax credit / rebate value: N.A.
Tax Credit Value
Parents receive a tax credit worth the lesser of (1) 80 percent of the average annual state cost of attendance for a K-12 public school student during the applicable tax year or (2) their children’s actual cost of attending school. If the taxes owed by the parents are less than the total credit allowed, they may receive a rebate equal to the balance of the unused credit.
Parents who transfer their child from a failing public school to a non-failing public or accredited private school are eligible. Parents with a child who is starting school for the first time in Alabama and zoned to attend a failing public school are also eligible. Alabama defines a public school as failing if it meets one or more of the following requirements: The school is labeled as persistently low-performing by the Alabama State Department of Education; the school is designated as a failing school by the state Superintendent of Education; the school does not exclusively serve a special population of students; or the school has been listed three or more times during the most recent six years in the lowest 6 percent of public K-12 schools on the state standardized assessment in reading and math.
The Alabama Education Association (AEA) filed a lawsuit in state court claiming the refundable tax credit
and tax-credit scholarship programs violate the state constitution’s provision regarding public funds
being used for charitable and religious institutions. The lawsuit also invokes several provisions of the
state constitution governing the procedures by which legislation is enacted and programs are funded. In
October 2013, a Montgomery judge granted a motion to allow parents from Montgomery and Mobile to
intervene as defendants in the lawsuit. The parents are represented by the Institute for Justice, a publicinterest
law firm that defends civil liberties. The Institute for Justice and the Alabama’s attorney general
are both seeking dismissal of the lawsuit. The AEA plaintiffs moved for a motion for judgment on the
pleadings asking the court to grant judgment in their favor now as to all of their claims that don’t concern
the means by which state dollars flow to religious schools. The hearing on all the motions in the state case
will be as early as mid-January 2014.
The Southern Poverty Law Center (SPLC) also filed a lawsuit in federal court claiming the school choice
programs violate equal protection. Alabama’s attorney general is seeking dismissal of the lawsuit.
Rules & Regulations
• Income Limit: None
• Prior Year Public School Requirement: Families must show a cost of transfer from a failing public school to a non-failing public school or a private school. Families may continue to receive the tax credit or rebate until the student reaches the highest grade level of the failing public school they are zoned to attend.
• Geographic Limit: Statewide
• Enrollment Cap: None
• Individual Credit / Rebate Cap: $3,563
• Testing Mandates: None
Ala. Code §§ 40-2A-7(a)(5) and 16-6D-1
Leslie Hiner | firstname.lastname@example.org