The Alabama Accountability Act is intended to help students in failing school districtsreceive a private education to better meet their needs. The donations made can also have a tax benefit for Alabamians. Built into this act is a credit that can be taken against any Alabama tax liability.

The maximum amount available to donate each year is $30,000,000, and individual taxpayers can donate up to $50,000. The amount donated can be claimed as a credit to directly counteract 50% of the taxpayer’s Alabama income tax liability. If 50% of the liability is covered and not all of the credit has been used, theexcess can be carried forward for the next three years. Next, the entire amount of the donation can be taken on your federal tax return as a charitable contribution.

Ultimately, the state tax credit and federal charitable deduction can have a very beneficial impact on your overall taxes. Individuals with Alternative Minimum Tax (AMT), those with estimated tax payment considerations, and even retirees with Required Minimum Distributions (RMDs) stand to see results with some strategic planning before the end of the year.