Montgomery, AL – Governor Kay Ivey on Friday signed Executive Order No. 742, formally expanding school choice options in Alabama by authorizing the state’s participation in the newly created Federal Education Freedom Tax Credit program, also referred to as the Federal Scholarship Tax Credit.
The action follows remarks made earlier this week during the governor’s State of the State address, where Ivey reiterated her goal of making Alabama the most school-choice-friendly state in the nation. The timing also coincides with National School Choice Week, which begins January 25.
“For over a decade, Alabama has been a trailblazer in offering parents and students options to access and afford the best quality education, and soon our families will have even more resources,” Ivey said.
Governor Ivey pointed to several existing education initiatives, beginning with the Alabama Accountability Act, passed in 2013, which provides scholarships to qualifying students seeking to transfer to higher-performing schools. She also referenced the CHOOSE Act, signed into law two years ago, which established refundable state income tax credits for qualifying education-related expenses such as tuition, textbooks, and after-school programs.
The Federal Education Freedom Tax Credit was created under the One Big Beautiful Bill Act, signed into law last July by President Donald Trump. The federal program allows taxpayers to receive federal tax credits for contributions to approved scholarship-granting organizations. Those contributions are then used to provide scholarships to eligible elementary and secondary students.
Scholarship funds may be used for tuition, books, fees, supplies, tutoring, and special-needs services at public, private, and religious schools. Students already participating in programs under the Alabama Accountability Act or the CHOOSE Act may also qualify for the federal scholarship program.
By building on Alabama’s existing scholarship framework and accountability systems, state officials say the federal program is intended to further broaden educational opportunities while offering taxpayers an additional mechanism to support students statewide.
Under Executive Order No. 742, Governor Ivey authorizes the Alabama Department of Revenue to administer the program in Alabama, including the certification of eligible scholarship-granting organizations.
The Federal Education Freedom Tax Credit program is scheduled to take effect in January 2027.
