What the Education Freedom Tax Credit Means for Alabama Families and Donors
Big changes are coming to school choice and Alabama families stand to benefit in a major way.
The new Education Freedom Tax Credit, launching in 2027, creates a federal tax credit for people who donate to scholarship-granting organizations like the Alabama Opportunity Scholarship Fund (AOSF). Translation: taxpayers can redirect part of their federal tax bill to fund K–12 scholarships for students right here in Alabama.
This isn’t a policy talking point. It’s a real, practical opportunity to expand educational access for families who need options. Let’s break it down.
First Things First: What Is the Education Freedom Tax Credit?
The Education Freedom Tax Credit allows individuals to receive a dollar-for-dollar federal tax credit when they donate to a qualified scholarship organization.
Beginning in 2027, donors can contribute up to $1,700 per year and reduce their federal tax bill by that same amount.
Instead of those dollars going straight to the IRS, they can help fund scholarships that give students access to schools and learning environments that better fit their needs.
That’s not a deduction. That’s not a maybe. That’s a direct credit.
How This Works With AOSF
Here’s the simple version:
- You donate to AOSF (up to the annual credit limit).
- You claim the federal tax credit when you file your taxes.
- AOSF uses those funds to provide scholarships to eligible Alabama students.
Those scholarships can help families cover tuition and other approved education expenses, opening doors that may have otherwise stayed closed.
Same tax dollars. Bigger impact. Closer to home.
Why This Is a Big Deal for Alabama
Alabama families already rely on scholarship programs to access schools that meet their children’s academic, social, and emotional needs. But demand consistently outpaces available funding.
The Education Freedom Tax Credit adds a new stream of support, and it doesn’t replace existing state programs. It builds on them.
That means:
- More students can be served
- More families can access options
- More donors can be part of the solution
It’s not about shifting money around. It’s about expanding opportunity.
Who These Scholarships Are Designed to Help
This program is focused on K–12 students from families with demonstrated financial need. In general, students are eligible if their family income is at or below 300 percent of the median income in their area. Many of these families are working hard, doing everything right, but still find that the right school or support system is financially out of reach.
Scholarships funded through this credit can help bridge that gap.
At AOSF, our role is straightforward: Make sure donor dollars are used responsibly and directed to students who need them most.
When Can Donors Participate?
The credit goes into effect in 2027, and we expect strong interest right out of the gate.
If you’re someone who:
- Pays federal income taxes
- Cares about educational opportunity
- Wants to see your dollars make a direct impact
…this is a program worth planning for.
The Bottom Line
The Education Freedom Tax Credit gives donors a smart way to give and gives families a powerful way to choose.
It’s not complicated. It’s not abstract. It’s a practical tool that can change real students’ lives — and AOSF is ready to help Alabama families make the most of it.
More opportunity. More access. More Alabama students finding the right fit. That’s a future worth investing in.
