Alabama Opts Into Federal §25F by Executive Order: Gov. Ivey Signs EO 742

On January 16, 2026, Alabama Governor Kay Ivey (R) signed Executive Order No. 742, confirming Alabama's participation in the federal Education Freedom Tax Credit (§25F), the program created under the One Big Beautiful Bill Act signed in July 2025 that lets taxpayers claim a dollar-for-dollar federal credit of up to $1,700 for donations to qualified Scholarship Granting Organizations. The order directs the Alabama Department of Revenue (ALDOR) to administer the program and to certify eligible scholarship organizations in the state. The credit becomes available beginning January 2027, in line with §25F's January 1, 2027 launch date. Ivey framed the move as building on Alabama's existing school-choice infrastructure, namely the 2024 CHOOSE Act and the 2013 Alabama Accountability Act, rather than as a standalone program built from scratch.

What sets Alabama apart is the instrument it used. Rather than have the state submit the IRS Form 15714 advance election that other governors filed around the same time, Ivey signaled participation through an executive order naming ALDOR as the administering agency. The distinction was noted explicitly by Ballotpedia, which reported on January 21 that Virginia's Glenn Youngkin had announced his state's intent on January 9 (a week before Ivey's order), while Mississippi's Tate Reeves (January 19) and Georgia's Brian Kemp (January 20) formally submitted Form 15714 advance elections in the week that followed. Alabama, by contrast, leaned on executive action and its standing Department of Revenue authority. The practical effect is similar (the state is in), but the paperwork trail differs, and that matters for donors and SGOs trying to confirm a state's status against the eventual IRS roster.

For SGO operators and donors, the executive order is the starting gun, not the finish line. ALDOR now has to stand up the certification process that determines which organizations can receive §25F contributions in Alabama, and the federal rules carry their own requirements: a 90% scholarship floor, means-testing that limits awards to families earning under 300% of area median income, and donor reporting that is distinct from anything the CHOOSE Act or Accountability Act demand. Operators who already run state-credit programs in Alabama will face the same build-versus-retrofit decision that Step Up For Students made in Florida and that Georgia GOAL made with its separate American GOAL entity, both of which kept the federal arm legally distinct. We track Alabama's certification progress and participating organizations on our Alabama state page, and the broader landscape sits in the national SGO directory.

Alabama's executive-order path also echoes Alaska, where Gov. Mike Dunleavy opted in administratively rather than through the legislature, though Alabama enters with far more existing scholarship machinery to build on. The mix of routes into §25F is widening: some states are filing the formal IRS advance election, some are acting by executive order, and others have reached the program only after legislatures overrode gubernatorial vetoes. The variation in how states opt in, and how each documents that choice, is something we explain in our explainers and map across every state on the national participation map.

The open question in Alabama is timing and detail: how quickly ALDOR publishes its certification standards, whether the agency aligns SGO requirements with the CHOOSE Act framework or runs §25F on a separate track, and how soon Alabama organizations can begin accepting federally creditable donations ahead of the 2027 launch. Founders weighing whether to establish one of Alabama's first §25F-eligible SGOs can review how the organizations work in our explainers and see the current national picture in the SGO directory. Because running a clean federal program means meeting the 90% floor, means-testing, and donor reporting from day one, a growing number of operators are choosing to run their programs on software written for §25F rather than retrofitting state-credit tooling.