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March 28, 2022 Group Watch: Senate Approves Increased Tax Credit for Scholarships

The Alabama Senate passed a bill amending the Alabama Accountability Act of 2013 to increase the income tax credit that can be claimed by an Alabama taxpayer. Since the passage of the original legislation in 2013, more than $176 million has been raised from the private sector to provide for educational opportunities for students. The changes are designed to give scholarship granting organizations (SGOs) more consistency in their budgeting and planning in two ways. One, it gives the SGOs more time to spend the scholarship funds: three years in stead of just one. And bill supporters believe that upping the tax credit for donors could lead to more donations. Under current Alabama law, a taxpayer may claim a tax credit amounting to 100 percent of the total contributions the taxpayer made to a scholarship granting organization for educational scholarships during the taxable year for which the credit is claimed, up to 50 percent of the tax liability of the taxpayer, not to exceed $50,000 per taxpayer or a cumulative amount of $30,000,000 annually. This bill bumps the credit up to 100 percent of the individual taxpayer’s liability, in an amount not to exceed $100,000.

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