Ivey Expands Alabama School Choice with Federal Tax Credits

MONTGOMERY — Gov. Kay Ivey on Friday signed Executive Order No. 742, confirming Alabama's entry into the Federal Education Freedom Tax Credit program, a cornerstone of President Donald Trump's One Big Beautiful Bill Act from July 2025. The order authorizes the Alabama Department of Revenue to certify scholarship-granting organizations and administer the program, set to launch Jan. 1, 2027. It complements the CHOOSE Act, signed by Ivey on March 7, 2024, which provides education savings accounts — up to $7,000 per student at participating schools or $2,000 for homeschoolers, capped at $4,000 per family — beginning the 2025-2026 school year.[1][2][5] The federal program offers dollar-for-dollar tax credits of up to $1,700 per taxpayer for donations to approved organizations, which fund scholarships for families earning up to 300% of area median income — covering most Alabama households. Eligible uses include private or faith-based tuition, books, tutoring, testing fees, homeschool materials and special needs services at public, private or religious schools. CHOOSE Act and Alabama Accountability Act participants may qualify, expanding options in cities like Birmingham and Mobile where public school challenges persist.[4][2] Ivey hailed the expansion as a win for students, building on Alabama's scholarship infrastructure. "Two years ago, I championed and signed Alabama’s universal school choice law, the CHOOSE Act," she said. Priority for CHOOSE funds goes to 500 special-needs students, military dependents at priority schools and low-income families, with siblings next in line.[1][5] Lawmakers and advocates see the federal layer as a boon for rural areas like the Black Belt, where private options are scarce. The program has no annual cap on credits, making it a permanent tool alongside state efforts. As Treasury rules finalize, Alabama's Revenue Department prepares SGO certifications to ensure seamless rollout.[4][2]