Student Funding

Use of Funds

Parents may use funds for eligible students in one or more of the following categories: tuition and fees at participating schools; textbooks; fees for after-school or summer programs provided by a participating school; private tutoring; curricula; instructional materials; tuition and fees for nonpublic online learning; educational software and applications; fees for standardized and nationally norm-referenced testing, college admissions tests, and advanced placement exams and related prep courses; education services and therapies for students with disabilities from a licensed or accredited practitioner or education service provider; and contracted services provided by a public school district including specific classroom instruction.

Student Funding and Source

The Alabama legislature has appropriated $100 million across multiple appropriations bills to fund the education savings accounts, with an additional $1 million appropriation given to the Department of Revenue to fund the program’s administration. The program does not begin until 2025, and the CHOOSE Act indicates that the intent is for an annual appropriation of at least $100 million to fund the education savings accounts. If all ESA students received the maximum ESA amount, about 15,000 students could participate under this appropriation. Parents of eligible students who enroll in a participating school may receive an annual credit up to $7,000 or the cost of the qualifying education expenses, whichever is less, deposited into an education savings account. Parents of eligible participating students not enrolled in a participating school may receive an annual credit up to $2,000, or the total cost of qualifying education expenses, whichever is less, with a $4,000 cap per family. At the conclusion of each academic year, unused funds are returned to the CHOOSE Act Fund. Because the program is funded through an appropriation, participation is limited by availability of funding.

(Last updated July 14, 2024)

Student Eligibility

Students are eligible to participate in the CHOOSE program if they are residents of Alabama between the ages of 5 and 19 and have not yet graduated the 12th grade. Children up to the age of 21 who would qualify for services under the Individuals with Disabilities Act (IDEA) or Section 504 of the Rehabilitation Act are also eligible to participate in the program. Students must be lawfully present in the United States. Parents and/or custodians must also be residents of Alabama and lawfully present in the United States. Students may not participate in the Alabama CHOOSE program while receiving funds through the Alabama Accountability Act or the Alabama Education Scholarship Program. For program years beginning January 1, 2025, and January 1, 2026, the credit is available to parents of students whose family has an adjusted gross income not exceeding 300% of the Federal Poverty Level for the preceding tax year ($93,600 for a family of four in 2024–2025). Beginning January 1, 2027, and for years to follow, the credit shall be available to the parent of an eligible student, without income limitations.

The legislature has established a priority for awarding the tax credits. The first 500 tax credits awarded annually are reserved for the parent of an eligible student with special needs. Priority is given to the parent of students participating in the program, siblings of participating students, and next to dependents of active-duty service members participating in the program who are enrolled in or assigned to a priority school as defined by the state, and finally based on the family’s adjusted gross income as a percentage of the Federal Poverty Level. The Department of Revenue is required to award a tax credit to a parent for any other eligible student in a family who is a sibling of a student previously awarded an education savings account.

(Last updated July 14, 2024)

EdChoice Expert Feedback

A program’s universality is measured on three points: Student eligibility, funding amount and source, and use of funds. Eligibility and funding amount and source have been explained above. Here, we explain how funds for this program may be used. Parents may use funds for eligible students in one or more of the following categories: tuition and fees at a participating schools, textbooks, fees for after-school or summer programs provided by a participating school, private tutoring, curricula, instructional materials, tuition and fees for nonpublic online learning, educational software and applications, fees for standardized and nationally recognized assessments, college admissions test and advanced placement exams and related prep courses, education services and therapies for students with disabilities from a licensed or accredited practitioner or education service provider, contracted services provided by a public school district including specific classroom instruction. (Last updated May 10, 2024)

Rules and Regulations

Program Guidelines

• Income Limit: 300% x Poverty in 2025 and 2026. Beginning in 2027, no income limitations; priority by income
• Prior Year Public School Requirement: None
• Enrollment Cap: Funded through an appropriation
• Account Cap: $7,000 for students in participating private schools; $2,000 for other students with a $4,000 cap per family
• Budget Cap: None
• Testing Mandates: State or nationally norm-referenced test; students with disabilities are exempt if testing is not appropriate
• Special Needs Pathway: Priority
• Homeschool Compatible: Yes

Participant and Family Guidelines

• Education Requirements: N/A
• Parent Supplemented Funds/Scholarships: Allowed
• Disbursement Payment/Frequency: Annual
• Reimbursement Allowed: No
• Miscellaneous: Parent of an eligible student must:
  • Submit any information required by the Department of Revenue for implementation, including the name of the student.
  • Agree to claim the credit only for qualified expenses to provide an education for an eligible student.
  • Agree that, to the best of the parent’s knowledge, no other person is claiming a credit for the eligible student.
  • Agree not to claim the credit for a student who enrolls as a full-time student in a public school district unless they are participating provider.
  • Agree to assume the full financial responsibility for the education of the student, including any additional costs incurred at an education service provider.
• Agree to comply with rules adopted by the Department of Revenue for the administration of the program.

Education Provider Guidelines 

• Accreditation/Approval:
  • Be accredited, or in the process of obtaining accreditation as determined by the Department of Revenue, by one of the six regional accrediting agencies and/or the National Council for Private School Accreditation, Cognia, the American Association of Christian Schools, the Alabama Christian Education Associations, the Alabama Independent School Association, or one of their partner accrediting agencies. Comply with all applicable health and safety laws or codes
  • Be an Alabama education service provider
• Employment Standards: Background checks and bachelor’s degrees for tutors
• Nondiscrimination:
  • Agree not to discriminate based on the grounds of race, color or national services in the provision of its services
  • Agree not to discriminate against participating students in setting tuition or fees
• Calendar/Curriculum/Attendance: Submit calendar to state
• Financial:
  • Provide financial statements that demonstrate to the satisfaction of the Department of Revenue, the school’s ability to adequately provide for the participating students’ continued receipt of educational services in the event the school suffers a financial failure or file a surety bond in an amount determined by the Department to be equal to the aggregate amount of the program funds expected to be paid during the academic year from participating students.
  • Agree to document amounts received for all qualifying expenses in a manner prescribed by the Department of Revenue.
  • Require all participating students to make payments of tuition and fees periodically on a schedule
• Miscellaneous:
  • Submit any information required by the Department of Revenue for implementation, including its address, contact information, and a summary of each program or service it proposes to provide to participating students.
  • Agree not to refund, rebate, or share any portion of program funds with a parent or student in any manner, and only use program funds for qualifying expenses.
  • Agree to submit annual reports to the Department of Revenue concerning implementation of the program, including the number of students participating, services provided, and other similar information.
  • Agree to comply with the Family Educational Rights and Privacy Act, 20 U.S.C. Section 1232g.
  • Hold a valid occupancy permit if required by the municipality where the school is located
  • Comply with the Alabama Child Protection Act of 1999, Chapter 22A of Title 16, Code of Alabama 1975
  • Require all participating students taking program funds to take a standardized assessment aligned to the curricula of the school, a nationally norm-referenced assessment or a nationally recognized aptitude assessment of the school’s choice, providing parents with individual results and the state with school-level test results
  • Inform the state of any events affecting a participating student’s eligibility

(Last updated December 4, 2024)

Governing Statutes

Alabama Department of Revenue Administrative Code Chapter 810-28-1

(Last updated January 3, 2025)

Legal History

This program has not been challenged in court.