Opening the Schoolhouse Doors - Tax Credits and educational Access in Alabama

Oct 15, 2026

Alabama’s 2013 Alabama Accountability Act created two tax-credit programs expanding educational choice in the state. One program provides refundable credits or rebates for parents who move children from failing public schools to approved non-failing public or private options, including religious institutions. The second program grants a 100% credit for contributions to Scholarship Granting Organizations that fund scholarships for low-income students, subject to eligibility and overall limits. Research and polling are used to argue for benefits and address criticisms.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages16

Reading Time40 min

AccessFree to download

Overview of Alabama’s 2013 Tax-Credit Programs

Program 1: Credits for transferring students

Program 2: Credits for Scholarship Granting Organizations (SGOs)

Intended benefits and eligibility rules

Access for low-income students

Limits on tuition and donation credits

Public support and research findings

Survey and poll evidence

Empirical study results

Criticism and legal concerns

Opening the schOOlhOuse DOOrs tax Credits and educational Access in Alabama By Dick M. carpenter ii, ph.D. anD angela c. ericksOn Opening hO e Opening the schOOlhOuse DOOrs tax Credits and educational Access in Alabama By Dick M. carpenter ii, ph.D. anD angela c. ericksOn Opening the SchOOlhOuSe DOOrS O n March 14, 2013, Alabama Governor Robert Bentley signed into law the Alabama Accountability Act, which, among other things, created two new tax-credit programs that expand educational choice in the Yellowhammer State. In so doing, Alabama joined more than a dozen other states that offer similar programs1 and added to its alreadylong list of state programs that enable students to attend the school of their choice, public or private, including religious institutions. The first of Alabama’s new programs provides a tax credit or rebate for 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.2 The value of the credit is the lesser of (a) 80 percent of the average annual state cost of attendance for a K-12 public school student during the applicable tax year or (b) their students’ actual cost of attending school.3 The tax credit is refundable, so even lower-income families who pay no income taxes can participate. The second program allows individuals and corporations to claim a 100 percent tax credit for contributions to approved Scholarship Granting Organizations (SGOs) . The SGOs in turn provide scholarships to low-income students to leave failing public schools and attend private schools, with no cap on the amount of tuition that can be covered The most important benefit of these programs is the opportunity they provide for students, particularly those of limited means, trapped in failing schools to receive a quality education. by the scholarship.4 Children are eligible to receive scholarships if their family incomes do not exceed 150 percent of Alabama’s median household income.5 For donations to SGOs, individuals and corporations can claim tax credits up to 50 percent of their tax liability; however, individual tax credits cannot exceed $7,500 per taxpayer or married couple filing jointly. The total amount of tax credits awarded in the SGO program is limited to $25 million.6 The most important benefit of these programs is the opportunity they provide for students, particularly those of limited means, trapped in failing schools to receive a quality education. Low-income parents, just like their middle-or upper-income peers, recognize the value of education for the future of their children7 but lack the means necessary to secure amore effective option when the one provided by the public fails in its responsibility. Programs like these provide a way toward genuine equality of opportunity for those students otherwise denied. With these K-12 programs, Alabama also joins a growing number of states that have extended educational choice to families beyond those with the financial wherewithal to choose a private school or Opening the SchOOlhOuSe DOOrS move to a district with better public schools. Fifteen tax-credit scholarship programs operate in 12 states, and seven individual tax-credit/deduction programs exist in seven states; this is in addition to the 19 state-funded scholarship programs that operate in 12 states and D. C.8 The growth in the number of tax-credit programs is accompanied by strong public support. Surveys of residents in 18 different states—including Alabama—have found between 60 and 80 percent of respondents supported tax-credit scholarship programs.9 Moreover, national polls in 2007 and in 2011 indicated 53 percent and 55 percent, respectively, of respondents supported tax credits for parents who incur educational expenses, such as private school tuition.10 Numbers for scholarship or grant programs indicate similar levels of support. Survey results from 19 states—Alabama include

FAQs

What two new tax-credit programs did Alabama create under the Alabama Accountability Act?

The act created (1) credits or rebates for parents transferring students from failing public schools to non-failing schools, and (2) a 100% credit for contributions to Scholarship Granting Organizations that provide scholarships to low-income students.

How does eligibility work for students receiving scholarships?

Children are eligible when their family incomes do not exceed 150% of Alabama’s median household income, enabling them to leave failing public schools for private schooling supported by scholarships.

What benefits does the document associate with school choice tax-credit programs?

It highlights improved educational outcomes such as greater achievement and higher graduation rates, plus increased satisfaction and better public schools attributed to competition pressure.

What concerns or detractors does the document describe about these programs?

Opponents predicted “unfortunate” and “unintended” consequences and raised constitutional concerns about tax credits supporting private schools affiliated with religious ministries, including the risk of court challenges and legal fees.

Oct 15, 2026

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