The Alabama Accountability Act has been helping disadvantaged young students receive a better education since 2013. Thousands of kids have benefited from this act, and now positive changes are being made to further help students get the education they deserve.
The Alabama Accountability Act (AAA) – Here is what is new:
Under prior law, AAA allowed you to redirect a portion of your state income taxes to a Scholarship Granting Organization (SGO) who, in turn, provided funding for a child from a failing public school to attend a private school or transfer to a non-failing public school that offers more opportunities for growth and knowledge. These scholarships go primarily to children from low-income families who normally wouldn’t have the option to give their kids the best education our state has to offer. In addition, this gift results in an income tax credit against your State of Alabama taxes, so it does not cost you a dime.
- Limited your tax credit to 50% of your state income tax liability.
- Limited your total contribution to $50,000 each year.
- Taxpayers can now redirect 100% of their state income tax liability to a GSO and get a full tax credit.
- The total contribution limit has been raised to $100,000 for 2022.
If You Need Help:For more information, visit the websites of either of the two largest scholarship-granting organizations (SGOs) in the state:
- Scholarship for Kids: A non-profit 501(c)3 organization that serves as a state-approved SGO under the AAA of 2013. They provide a helpful step-by-step guide on their website here. They require parents to contribute at least a nominal amount towards the scholarship for their child.
- Alabama Opportunity Scholarship Fund: AOSF was created to empower low-income parents to help match their children to the learning option that best meets their child’s needs. They, too, have a step-by-step guide found on their site.
In many ways, our state’s future economy hinges on the quality of our children’s education. Under the Alabama Accountability Act, each of us has the opportunity to help a child in need of better education at no cost to us by simply redirecting our state income taxes.
Be sure to share this article with your fellow taxpayers, and together we can raise the educational standards of our state! For more information, consult your tax professional or financial advisor before acting on these comments if you want to learn more.
Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including 50 Rules of Success; J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.
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