HB558 Alabama 2014 Session

Summary

Primary Sponsor

Chad Fincher

Republican

Co-Sponsor

Mary Sue McClurkin

Session

Regular Session 2014

Title

Alabama Accountability Act, $7,500 limit on scholarship contributions by individual taxpayers removed, pass-through entities allowed to make contributions to scholarship granting organizations, release date for unaccounted scholarship funds moved, reporting period changed from calendar to school year, Sec. 16-6D-9 am'd.

Summary

HB558 expands Alabama's scholarship tax-credit program by removing the individual cap, allowing pass-through entities to participate and pass credits to owners, and updating timing and retroactive applicability to 2014.

What This Bill Does

It removes the $7,500 annual cap on individual contributions to scholarship granting organizations and lets pass-through entities such as S-corporations and LLCs contribute and pass the credit through to their owners. It expands who can claim credits to include owners of pass-throughs and adjusts timing by moving the release date for unaccounted funds to May 15 and changing the SGOs' reporting period from calendar year to school year, with retroactive effect to tax years starting in 2014.

Who It Affects

• Individual taxpayers (including owners of pass-through entities) who donate to scholarship granting organizations and may claim tax credits based on those contributions.
• Scholarship granting organizations and participating schools (including nonpublic schools) that receive contributions, must meet new accountability and reporting requirements, and be subject to oversight and eligibility rules.

Key Provisions

• Remove the $7,500 per-year cap on contributions by individual taxpayers to scholarship granting organizations and expand eligibility to include owners of pass-through entities.
• Allow pass-through entities (e.g., subchapter S corporations and LLCs) to contribute to scholarship granting organizations and permit the credit to pass through to the entity's owners pro rata or by distributive share.
• Cap on program credits remains at $25,000,000 annually and credits may be carried forward for up to 3 taxable years; credits for individuals and pass-throughs are tied to contributions and tax liability.
• Credit can be claimed for educational scholarships with up to 50% of the tax liability (and for corporate taxpayers up to 100% of contributions, up to 50% of income tax liability), subject to the overall program cap and rules;
• Change the release date for unaccounted scholarship funds from September 15 to May 15 each year and switch the scholarship-organization reporting period from calendar year to school year.
• Retroactive effective date: applies to tax years beginning on or after January 1, 2014; immediate effectiveness upon passage/approval.
• Administrative accountability standards for SGOs include notifying the Department of Revenue, proving 501(c)(3) status, distributing scholarships, providing receipts, and ensuring minimum spending on scholarships (e.g., at least 95% of revenue from donations on scholarships).
• Scholarships must be portable and usable at qualifying schools; costs may be prorated if a student transfers within a school year.
• Public reporting and testing requirements: SGOs must annually report financials and scholarship data; participating schools must administer state or norm-referenced tests; test results and learning gains must be reported and made available publicly after a specified period.
• Financial and viability requirements for participating nonpublic schools receiving significant donations; background checks for staff and board members; nondiscrimination, portability, and other safeguards to prevent misuse of funds and ensure student safety.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Alabama Accountability Act