Creating Hope and Opportunity for Our Students’ Education Act of 2024: The CHOOSE Act
The CHOOSE Act, signed into law by Gov. Kay Ivey on March 7, 2024, makes refundable income tax credits called education savings accounts (ESAs), available to support the success of every K-12 student in Alabama. The law requires the Alabama Department of Revenue to establish a framework and funding for ESAs, which may be used by eligible families to cover tuition, fees, and other qualified education expenses at approved education service providers (ESPs) in Alabama.
ESAs in the amounts below will be available beginning with the 2025-2026 Academic Year:
- Up to $7,000 per participating student enrolled in a participating school
- Up to $2,000 per participating student not enrolled in a participating school (e.g. students that participate in individual or group homeschool programs or co-ops, non-participating schools, or other similar programs); capped at $4,000
Year 1: Academic Year 2025-2026, the credits will be awarded as follows:
- The first 500 ESAs awarded for participating students* with special-needs
- Participating students* who are dependents of active-duty service members enrolled in or assigned to a priority school
- Remaining awarded for participating students* whose family have an adjusted gross income not exceeding 300 percent of the federal poverty level for the preceding tax year
*Priority goes first to participating students and siblings of participating students.
Year 2: Academic Year 2026-2027, the credits will be awarded as follows:
- The first 500 ESAs awarded for participating students* with special-needs
- Participating students* previously awarded in the prior academic year
- Participating students* who are dependents of active-duty service members enrolled in or assigned to a priority school
- Remaining awarded for participating students* whose family have an adjusted gross income not exceeding 300 percent of the federal poverty level for the preceding tax year
*Priority goes first to participating students and siblings of participating students.
Year 3: Academic Year 2027-2028 and beyond, the credits will be awarded as follows:
- The first 500 ESAs awarded for participating students* with special-needs
- Participating students* previously awarded in the prior academic year
- Participating students* who are dependents of active-duty service members enrolled in or assigned to a priority school
- Remaining credit awarded for participating students* regardless of adjusted gross income
*Priority goes first to participating students and siblings of participating students.
UPDATED Nov. 6, 2024:
On Sept. 30, 2024, the Alabama Department of Revenue released a draft version of guidelines for students, parents, and Education Service Providers (ESPs). You can read the full document by clicking here. We strongly encourage all interested parties to carefully read these guidelines.
On November 5th, the Department of Revenue hosted a public hearing on the draft guidelines. Multiple agencies and organizations, including the AISA, provided feedback and comments to inform the Department of Revenue’s considerations prior to the public hearing.
To provide greater clarity on the current status of the process, here’s an outline of key dates and actions:
- Certification Deadline: The Department of Revenue has until November 18th to certify the rule, which would then be published on November 27 in the Administrative Monthly.
- Legislative Council Review: Upon publication, the Legislative Council has until January 11, 2025, to act. If no action is taken, the rule automatically becomes effective.
- Alternative Timeline: If the Department delays certification until December, they would need to complete this step by December 19. The rule would then be published on December 31, with the Legislative Council’s action deadline extended to February 14, 2025.
While we are confident that the Department received substantial feedback, we do not anticipate significant changes to the rules as presented. Once we confirm that the information is stable, we will prepare a simplified informational document to share with our members.
In the meantime, we encourage you to stay informed by attending any of the upcoming webinars hosted by ClassWallet and the Department of Revenue through the official Choose Act website.
Below are some of the key takeaways from the most up-to-date version of the guidelines.
As of early October 2024, ESPs can now begin applying to participate in the CHOOSE Act. To apply, ClassWallet has set up a website specifically for Alabama. You can visit that website by clicking here.
For the 2025-2026 school year, parents of eligible students can begin applying on Jan. 2, 2025. Applications will close on April 7, 2025. Award notifications will go out to all families beginning on May 1, 2025.
In order for families to qualify, parents will need to provide documentation that verifies their income, residency, and guardianship. Parents of special needs students or parents who are active-duty service members will also need to provide documentation in order to receive Certain Priority Applicant Status.
There is no reimbursement or refund of any ESA funds directly to a parent of student. Any funds left in the ESA at the end of an academic year will be returned to the CHOOSE Act fund. Leftover funs will not rollover year to year.
ESPs must submit all required documentation to the Department of Revenue in order to participate in the program, as listed in the guidelines. These include, but are not limited to, the ESP’s verification of accreditation, maximum number of students who can enroll, tuition and fees, and financial statements that demonstrate the school’s ability to provide for students’ continued education in the event the school suffers a financial failure.
Among other requirements, ESPs must agree to submit annual reports to the department regarding the number of students participating, services provided, and the amount received for all qualifying expenses. ESPs must also agree not to discriminate against participating students in setting tuition or fees.
ESPs must also provide the department with school-level test results for participating students. Participating students must take a standardized assessment at least once annually. Special-needs students for whom standardized testing is not appropriate are exempt from the testing requirement.
Parents can only direct payments from an ESA account to an ESP through the platform. Payment for services can be made before or after the service has been rendered. However, invoices will be approved only for services provided within an academic year for which a tax credit has been awarded.
The following expenses are eligible for purchase from an ESP through the use of an ESA:
- Tuition, and the following fees:
- Enrollment and registration fees
- Student fees
- Activity fees
- School fee
- Security fee
- Programming fee
- Administration fee
- Technology fee
- Supply fees
- Textbooks
- Fees for after-school or summer education programs provided by the participating ESP
- Private tutoring, as outlined in the guidelines.
- Curricula or instructional materials, as outlined in the guidelines.
- Computers
- Laptop, desktop or tablet computers that have a cost not exceeding $1,200. Computers can be purchased every two years, as defined in the guidelines.
- Certain technological aids are limited to $500 per academic year for participating students
The following fees are not eligible:
- Athletic fees
- Missed session/cancellation fees
- Late fees
- Capital or building fees
- Commitment fees
- Transportation fees
- Food
- Field trip fees
- Child-care fees
- Uniforms
These are draft guidelines, and are subject to change. The department will finalize these guidelines following a public hearing at 1:30 P.M. on Tuesday, November 5, 2024 via web conference. More information is coming about how the public can participate.
All interested parties may present their views in one of two ways:
- During the public hearing via web conference
In writing to the Secretary of the Alabama Department of Revenue, Room 4131, Gordon Persons Building, 50 N Ripley Street, Montgomery, Alabama 36132
CHOOSE Act FAQ
In March, Alabama Governor Kay Ivey signed the CHOOSE Act into law, establishing an education savings account initiative that allows families more flexibility in choosing their children’s schooling. This legislation, which marks Alabama as the 14th state to adopt such a program, provides financial assistance to families opting for private or public schools of their preference.
Below, we have compiled some of the frequently asked questions that we’ve had in our office and from speaking with our other non-public school partners around the state.
The CHOOSE Act, now law, will commence in the 2025-26 school year, granting parents the opportunity to enroll their children in a participating school of choice with the aid of a $7,000 educational spending account. There is also an option for parents of students enrolled in homeschool, or non-participating schools, with a lower funding amount. For the purposes of this FAQ, we will focus on traditional students and our member schools. Initial funding for these ESAs will be not less than $100 million.
Initially, eligibility for the first two years will be based on income criteria, with families of four earning approximately $95,000 or less, students with special needs and active-duty service members enrolled in or assigned to a priority schools. Preference will be given to the first 500 spots for students with special needs. After the initial phase of two years, the income threshold will be removed, but priority will be given to economically disadvantaged families.
The family application process for eligible students will open on Jan. 2, 2025 and close on April 7, 2025. However, eligible families are encouraged to apply as soon as possible due to limited funding during the first two years of the program. If approved, the full amount will be available in the student’s ESA for use on or after July 1.
During October 2024, there will be a period of public comment, followed by a final rule hearing on November 5th, 2024, when we anticipate the rules will be finalized. Furthermore, the Department of Revenue expects the program’s website to go live in early October. They will also begin onboarding Education Service Providers (schools) around the same time.
To learn more about the family application process and other important information, please review the latest guidelines from the department of revenue by clicking here.
The Department of Revenue (DOR) has officially selected ClassWallet as the platform vendor for the program. ClassWallet is a well-established vendor used by ESA programs in other states. Additionally, they have partnered with FACTS for the application process, which many of our member schools are already familiar with.
These ESAs will be used by parents to make qualifying purchases from a participating ESP. To read more about this process, and qualified expenses, click here.
The Department of Revenue (DOR) has also chosen Markstein, a marketing firm out of Birmingham, to manage the program’s promotional materials. You can also sign up for email updates through the Department of Revenue’s website.
This indicates their commitment to effectively promoting the program and providing timely, accurate information to families and schools. Additionally, AISA will provide the latest updates on the CHOOSE Act on this page, as well as across our digital platforms.
Nearly 100% of our member schools meet the criteria for participating schools as they administer nationally normed tests and are accredited by Cognia and/or AISA. I think schools will need to wait until all facts are known, regarding the established guidelines, before making the decision to participate. However, based on the information currently available, I imagine there will be a high participation rate.
This legislation doesn’t alter admissions policies, school mission or educational freedoms; it merely empowers parents to choose the best-fit educational setting for their children. Participating schools will not be recipients of state or federal funds through participation in this program. I am confident that the CHOOSE Act will allow our member schools to reach more families in the communities we serve and have generational impact.
The funding for these opportunities is held separately and doesn’t affect public school funding calculations. The CHOOSE Act aims to empower parents by providing educational options beyond their residential district. The hope is that increased choice will foster healthy competition, benefiting both students and schools alike.
