Alabama § 16-6J-3 - Refundable Income Tax Credit Established; Applicability; Priority.

§ 16-6J-3. Refundable Income Tax Credit Established; Applicability; Priority.

(a) To offset the cost of qualifying educational expenses, there is established a refundable income tax credit subject to this chapter and to the availability of monies in the CHOOSE Act Fund established pursuant to Section 16-6J-8.

(b)(1) For the years beginning on January 1, 2025, and January 1, 2026, the credit shall be available to the parent of an eligible student whose family had an adjusted gross income not exceeding 300 percent of the federal poverty level for the preceding tax year. The credit shall be awarded in an amount specified in subsection (c) and subject to the priorities specified in subsection (d).

(2) For the years beginning on or after January 1, 2027, the credit shall be available to any parent of an eligible student. The credit shall be awarded in an amount specified in subsection (c) and subject to the priorities specified in subsection (d).

(c)(1) For participating students enrolled in a participating school, the annual amount of the credit shall be seven thousand dollars ($7,000) or the actual cost of the qualifying educational expenses, whichever is less.

(2) For participating students not enrolled in a participating school, the annual amount of the credit shall be two thousand dollars ($2,000) or the actual cost of the qualifying educational expenses, whichever is less, provided that the aggregate amount of all credits awarded to a parent for such students shall not exceed four thousand dollars ($4,000).

(d) In allocating the tax credits made available pursuant to subsection (b), the department shall give priority first to participating students and siblings of participating students, then to participating students who are dependents of active duty service members enrolled in or assigned to a priority school as defined in Section 16-6D-4, and then based on the family’s adjusted gross income as a percentage of the federal poverty level, provided that the department shall reserve the first 500 tax credits for the parent of an eligible student who is a special-needs student.

(e) If the department awards a tax credit to a parent for one eligible student, the department shall award additional tax credits to the parent for any other eligible student in the family who is a sibling of the eligible student for whom a tax credit was previously awarded. Nothing in this chapter shall be construed to authorize the award of more than one tax credit per participating student.

(f) Failure to provide required documentation for the tax credits provided in this section shall result in the automatic denial of the respective tax credit.

(g) Amounts received pursuant to this section do not constitute taxable income to the parent of a participating student or to the participating student. The refundable income tax credit provided under this section shall not be subject to offset or debt collection against any liability.

(h) A participating student who is a special-needs student remains eligible to receive special education or similar services from the resident school district as provided by federal or state law.

(i) Nothing in this chapter shall affect or change the athletic eligibility of student athletes governed by the Alabama High School Athletic Association or similar association.