A bill creating tax credits for the families of students in failing schools passed last week. The Alabama Accountability Act of 2013 (HB84) was created to provide more flexibility in the public education system, both for schools and students. The bill does three things:

  1. Gives local school districts greater flexibility in complying with state regulations.
  2. Creates tax credits for families with students in a chronically failing school to attend a private school or a non-failing public school.
  3. Creates tax credits for taxpayers who donate to a scholarship fund that assists low-income students with the cost of attending a private or non-failing public school.

The objective of the tax credit is to provide families “stuck” in a failing school another option. The income tax credit is equal to 80 percent of the average annual state cost of attendance for a public K-12 student, which, according to a news release from Alabama Policy Institute, was about $4,000 in 2013.

Businesses who donate to certified nonprofit scholarship organizations will get a tax credit equal to 50 percent of their donation, up to 50 percent of their tax liability. Individuals who donate to these organizations will get an income tax credit equal to 100 percent of their donation, up to 50 percent of their tax liability. Combined, these tax credits cannot exceed $25 million annually.

The Alabama Education Association filed a lawsuit on March 5 to block the bill, arguing it would hurt public schools.

Gov. Robert Bentley is expected to sign the bill into law early this week.

Find more information on the Alabama Accountability Act of 2013 here.