Alabama’s Education Scholarship Program is a tax-credit scholarship, which allows taxpayers who donate to nonprofit scholarship-granting organizations (SGOs) to receive tax credits for their contributions.

Children are eligible to receive scholarships if their family household income does not exceed 250 percent of the federal poverty level ($75,000 for a family of four in 2023-24). Also, qualifying students must be younger than 19 years of age. Once a student receives a scholarship, the family’s income may not exceed 350 percent of the federal poverty level ($105,000 for a family of four in 2023-24). Public and private school students assigned to priority schools receive scholarships first. Alabama defines a public school as priority if it meets one or more of the following requirements: 1) The school is designated as a priority school by the state Superintendent of Education, or 2) the school does not exclusively serve a special population of students and has received a D or an F on the most recent state report card. If an SGO has scholarship funds unaccounted for on July 31 of each year, scholarships may be made available to eligible students in public school, regardless of whether their assigned public school is considered priority. No more than a quarter of first-time recipients may have already been enrolled in a private school the previous year.

Students with unique needs are also eligible if they have an Individualized Education Plan (IEP) or 504 plan and attended a primary or secondary school within Alabama during the immediately preceding school year.

Children are eligible to receive scholarships if their family household income does not exceed 250 percent of the federal poverty level ($75,000 for a family of four in 2023-24). Also, qualifying students must be younger than 19 years of age. Once a student receives a scholarship, the family’s income may not exceed 350 percent of the federal poverty level ($105,000 for a family of four in 2023-24). Public and private school students assigned to priority schools receive scholarships first. Alabama defines a public school as priority if it meets one or more of the following requirements: 1) The school is designated as a priority school by the state Superintendent of Education, or 2) the school does not exclusively serve a special population of students and has received a D or an F on the most recent state report card. If an SGO has scholarship funds unaccounted for on July 31 of each year, scholarships may be made available to eligible students in public school, regardless of whether their assigned public school is considered priority. No more than a quarter of first-time recipients may have already been enrolled in a private school the previous year.

Students with unique needs are also eligible if they have an Individualized Education Plan (IEP) or 504 plan and attended a primary or secondary school within Alabama during the immediately preceding school year.

Starting from the 2025-2026 Academic Year, ESAs will be available in these amounts:

• Up to $7,000 per participating student enrolled in a participating school.
• Up to $2,000 per participating student not enrolled in a participating school. However, this amount is capped at $4,000 for students in individual or group homeschool programs, co-ops, non-participating schools, or similar programs.

Scholarship amounts are determined by SGOs. Scholarships are capped at the lesser of the qualifying school tuition and fees or $10,000 per student. Scholarship recipients may choose to attend a qualifying school, which includes a (non-priority) public school outside their resident school district or an accredited private school.

Qualifying expenses for students with unique needs include: Tuition and fees at a qualifying school; textbooks required by a qualifying school; payment to a licensed or accredited tutor; payment for the purchase of curriculum or instructional material; tuition and fees for an approved nonpublic online learning program; educational services for an eligible student with unique needs from a licensed or accredited practitioner or provider; or contracted services from a public school district, including individual classes.

General Regulations:

• Income Limit: 250 percent x FPL
• Prior Year Public School Requirement: Yes, with exceptions
• Geographic Limit: Statewide
• Enrollment Cap: None
• Scholarship Cap: $10,000
• Testing Mandates: State test or Nationally norm-referenced tests (unique needs exempt)
• Credit Value: 100%
• Per Donor Credit Cap: 100% liability up to $100,000 (individual) / 100% liability (business)
• Total Tax Credit Cap: $40 million; automatic escalator up to $60 million

SGO Regulations: 

• Use at least 95 percent of contributions for scholarships
• Conduct criminal background checks on all employees and board members
• Make scholarships portable to any qualifying school
• Ensure at least 75 percent of first-time scholarship recipients were not enrolled in priority schools or a private school during the previous year
• Submit annually to the state:
• Data on accepted contributions
• Data on scholarships awarded and funded, including the amount awarded to students assigned to attend a priority school and the percentage of first-time scholarship recipients who were enrolled in a public school the previous year
• Financial audit performed by a certified public accountant
• Reimburse the local school system for all contracted services provided to an eligible student and an eligible student with unique needs
• Qualify students with unique needs
• Maintain 10% reserve balance

School Regulations:

If public: 

• Not a priority school; 
• Outside the recipient’s resident school zone. 

If non-public: 

• Accredited by one of the enumerated regional or national accrediting agencies; 
• Submit letter of intent to participate; 
• Must obtain accreditation within three years of letter of intent to participate; 
• Approved schools awaiting accreditation must: 
• In operation at least three years (may be waived depending on governance structure); 
• Daily attendance at least 85%; 
• 180 day school year or hourly equivalent; 
• 6.5 hour school day; 
• Stanford Achievement Test or equivalent; 
• American College Test before graduation; 
• Comply with credit requirements for high schoolers; 
• Students with unique needs exempt from standard testing and curricular requirements; 
• Maintain website with school and tuition information; 
• Affidavit of financial and academic status;