What the Education Freedom Tax Credit Means for Alabama Families and Donors

February 11, 2026

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:

  1. You donate to AOSF (up to the annual credit limit).
  2. You claim the federal tax credit when you file your taxes.
  3. 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.

A mom helping child with school work at a kitchen table, with a laptop and pencil cup nearby
August 17, 2026
We want to hear from Alabama homeschool families as AOSF explores how a new homeschool fund could better support their educational needs.
August 10, 2026
Earlier this year, our Operations Manager Abbie Schofield shared her “why” for school choice . Now, as a mother navigating a housing market where a home’s school zone can be just as important as its price or location, she has a new perspective to share. Her story is a reminder that school choice isn’t about whether a school is “good” or “bad.” It’s about finding the environment where a particular child can feel safe, supported and capable of learning, and giving parents the freedom to choose it. I grew up in a small city with a fantastic public school system. Every teacher I had was kind, loving, and dedicated. Still, all I wanted to do was leave. In elementary school, I came home crying, begging my parents to send me to a local private school where my church friends went. I was bullied consistently to the point that school felt unbearable. I couldn't understand why I couldn't go—though I do now. It was a sacrifice my family simply couldn't afford. Had our state’s tax-credit scholarship program existed then, we would have qualified. Things eventually improved. I threw myself into academics and extracurriculars, graduating fourth in my class, Senior Class President, and Color Guard Captain. I worked part-time and took on every activity possible because I needed a scholarship to afford college. When an endowed scholarship ultimately made my dream of attending The University of Alabama affordable, it changed my life forever. Today, I manage finances and operations for the very scholarship program that could have changed my childhood. Every time I speak with a parent asking about our scholarships, I hear the same desperation I remember from my own mother—a longing for a happier, safer place for their child to learn. Now, as a mother, I find myself sitting on the other side of that table. My husband and I are currently house hunting to move closer to his job. Right down the road from one house we like sits an adorable home—$100,000 cheaper with significantly more square footage. But because it sits just across a boundary line, zoned for a different school track, I won’t even consider it. I am a parent with resources, a two-income household, and a career dedicated to navigating educational choices in our state. Yet I feel severely trapped by zip codes. I want the best public education for my son, who is in early intervention and will likely need an Individualized Education Program (IEP). Programs like the Alabama Accountability Act allow transfers out of failing school zones. But because the local elementary school isn't labeled "failing"—even if the middle or high school down the line is—transferring isn't an option. And even if neighboring public schools accepted transfers, a child requiring specialized IEP accommodations is rarely prioritized for open-enrollment slots. Meanwhile, stretching our budget to pay private school tuition on top of a mortgage would be a heavy financial burden. My husband and I are proud products of public K-12 schools and public universities. Some of my closest friends are public school teachers. They are deeply dedicated, overworked, and underpaid. They deserve far more support than they receive. But so do our children. Every parent deserves the ability to make educational choices that make their child feel safe, supported, and capable of learning. Sometimes a child needs a different environment not because a school is bad, but because their specific needs—whether ADHD, specialized learning, or safety—require a different fit. And when a school is failing, forcing a child to remain there for the sake of system optics or ADULT politics is indefensible. Our children deserve their best shot at their best possible future. The parents who know and love them best deserve the right to help get them there—regardless of their zip code or income.
Hands working over paperwork and receipts on a wooden table with a calculator and pens
August 3, 2026
Nearly $38 million in tax credits remain. Learn how to support Alabama students by redirecting your state tax dollars through AOSF.
July 27, 2026
School choice in Alabama is expanding, giving families more opportunities to find the educational environment that best meets their child’s needs. But with new programs and updates happening quickly, it can be challenging to understand how each opportunity works and how they fit together. In the latest episode of Bama Knows Education, from Love Your School Alabama , we take a closer look at three key programs shaping the future of education in Alabama: the Alabama Accountability Act (AAA) Scholarship Program, the CHOOSE Act, and the new Federal Education Freedom Tax Credit.
School hallway lined with colorful backpacks and coats against the wall
July 22, 2026
Can Alabama AAA Scholarship donors choose a specific school? Learn how tax credit scholarship contributions work and how your donation supports students statewide.
Student writing at a classroom desk while classmates sit behind them, with colorful posters on the wall.
July 20, 2026
Starting in 2027, Alabama taxpayers can redirect up to $1,700 in federal tax liability to support K-12 scholarships through the Education Freedom Tax Credit.
a
July 14, 2026
Learn how the Alabama AAA Scholarship Program turns tax credits into educational opportunity.
July 1, 2026
For 250 years, freedom has opened doors. See how educational opportunity is helping Alabama families build brighter futures.
June 24, 2026
See how Alabama families, schools, and donors can benefit from the Education Freedom Tax Credit.
June 22, 2026
From student-run restaurants to workforce training, a new Montgomery microschool is redefining education.