The Alabama Department of Revenue in Montgomery on Thursday will hold public hearings on nine new proposed tax rules related to the Alabama Accountability Act of 2013, including tax deductions for student scholarships. The ACA allows scholarship donations to approved organizations and state income tax credits for certain amounts.
The Legislature passed the ACA to allow flexibility operating and educational contracts between the state Board of Education and local school districts. It also created tax credits for families of students in certain failing public schools, and tax credits for individuals and businesses donating scholarships to approved non-profit Scholarship Granting Organizations for children to attend non-failing public schools or private schools. The qualifying Scholarship Granting Organizations can be found here. As of Aug. 1, there were five approved 501(c)(3) Scholarship Granting Organizations listed by the DOR.
The statewide cap for tax credits will be $25 million in any tax year. First-come, first-served tax credit reservations can be made on the ADOR Website via MAT account portal.
Scholarships may be created for students transferring from failing public schools to qualified private schools and, under some circumstances, to other students from poor families transferring to or entering qualified private schools, according to Scholarships for Kids Inc. The qualifying schools also are listed on the DOR website.
The Business Council of Alabama supports flexibility and options for students in failing schools that create opportunities for them to succeed.
According to the ADOR, the allowable credit for a corporation is limited to 100 percent of the amount of its donation. The maximum allowable credit for an individual taxpayer is $7,500, or 100 percent of the donation, whichever is less. The credit amount used to offset a taxpayer’s tax liability for a given tax year is limited to 50 percent of the tax liability of the donor or the amount of the allowable credit, whichever is less.
ADOR public hearings for proposed new rules are scheduled to begin at 9 a.m. Thursday in Room 1203 on the First Floor of the Gordon Persons Building, 50 N. Ripley St., in Montgomery. A second hearing is scheduled to begin at 1 p.m. in the Gordon Persons Building auditorium. The department has 90 days after Thursday to adopt the proposed rules.
-Dana Beyerle