Who Is Eligible for the Education Freedom Tax Credit?
February 16, 2026
What Is the Education Freedom Tax Credit?
The Education Freedom Tax Credit (EFTC) is a federal tax credit that lets Alabama taxpayers reduce their federal income tax liability by donating to a qualified Scholarship Granting Organization (SGO) like the Alabama Opportunity Scholarship Fund.
When you give, you get a dollar-for-dollar federal tax credit, not just a deduction, for your contribution.
Key benefit: Donate up to $1,700 per individual and cut your federal tax bill by the exact same amount.
This makes the EFTC one of the most impactful tools for supporting school choice and education scholarships in Alabama.
Who Qualifies for the Education Freedom Tax Credit?
If you’re an Alabama taxpayer who:
- Owes federal income taxes
- Makes a contribution to a qualified SGO
— then you’re eligible to claim the EFTC.
Eligible Taxpayers Include:
- Individual filers
- Married couples filing jointly
- Small business owners and pass-through entities (LLCs, S-corps, sole proprietors) that elect to pass the credit to the owner’s personal return
There are no special income requirements to qualify for the tax credit, as long as you owe federal taxes, you can claim it.
How the Education Freedom Tax Credit Helps Alabama Students
The Education Freedom Tax Credit helps families afford K-12 education options by expanding scholarship funds that can be used for:
- Tuition
- Fees
- Books and education supplies
- Tutoring or other approved educational services
Scholarship priority is typically based on income, often serving families at or under 300% of the median household income.
This boosts school choice in Alabama, giving families real options outside traditional public schools. Scholarships through the Alabama Opportunity Scholarship Fund help families access the best educational fit for their children.
How to Claim the Education Freedom Tax Credit in Alabama
To take advantage of the EFTC:
- Make a qualified contribution to a Scholarship Granting Organization (SGO) like the Alabama Opportunity Scholarship Fund.
- Receive an acknowledgment letter from the SGO.
- Claim the credit on your federal tax return using IRS Form 3800 (General Credit) and related instructions.
This process ensures your contribution transforms into a federal tax credit, meaning your overall tax bill goes down by the amount you choose to give.
Why the Education Freedom Tax Credit Matters for Alabama
Alabama continues to expand school choice with programs like the Education Freedom Tax Credit, the Alabama Accountability Act, and the CHOOSE Act. Together, these policies increase educational options for families and support scholarship growth across the state.
Supporting the Alabama Opportunity Scholarship Fund through the EFTC means:
- More scholarship dollars for Alabama students
- Improved access to high-quality school choices
- Federal tax savings for 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.
Sherri Rowton, Development Director, shares why she supports school choice for all Alabama families. I was fortunate to grow up in a family where education was always a top priority. My mother was a first-generation college graduate who spent her career as an elementary school teacher. My father overcame a difficult childhood by enlisting in the military, where he earned a bachelor’s degree and two graduate degrees. From an early age, I saw how education can open doors and change the trajectory of a life. I later spent two decades as a fundraiser for Auburn University, where I witnessed firsthand the transformative power of education. Our generous donors gave so that others could earn an education—something no one could ever take away from them. But that foundation must begin well before college, equipping students for lives in which they, and their families, can truly flourish. That is why Alabama Opportunity Scholarship Fund is so invaluable. Through the generosity of our supporters, we empower parents to choose the school and learning environment that best fits the needs of their children—whether public, private, homeschool, or microschools. My own family experienced the difference the right school can have. Our local public school provided my older son with exactly what he needed to succeed; he is now a college graduate with a full-time career. My younger son, however, needed an environment with more structure than his school could provide. We were able to find a setting that better met his needs, and he is now a college senior—an outcome I sincerely doubt would have been possible without that change. It is my honor and privilege to work alongside such generous donors who make opportunities like these possible for families across Alabama. Education freedom is truly a win-win for families, for our donors, and for the future of our state.
Meet Tonya Jones, our Implementation & Operations Manager, and learn why school choice matters to her and to families across Alabama.
Meet Casandra Meguiar, our Development Manager, learn why school choice matters to her families and to families across Alabama.
Meet the people behind our work and discover why school choice matters—through personal stories of opportunity, access, and impact.
Meet the people behind our work and discover why school choice matters—through personal stories of opportunity, access, and impact.
Meet the people behind our work and discover why school choice matters—through personal stories of opportunity, access, and impact.
Deepening Our Commitment to Students and Families Statewide
Learn how the new federal ECCA program expands school choice for families and offers tax credits for donors—coming to Alabama in 2027.
