The Friedman Foundation for Educational Choice

Advancing Milton and Rose D. Friedman's Vision of School Choice for All Children

Arizona - Low-Income Corporate Income Tax Credit Scholarship Program

Enacted 2006 • Launched 2006 • Tax-Credit Scholarship

Arizona provides a credit on corporate income taxes for C-Corporations for donations to School Tuition Organizations (STOs), nonprofits that provide private school scholarships. STOs receiving donations for this program must award scholarships to low-income students. Corporate taxpayers contributing to STOs may claim a tax credit equal to the full amount of their contribution. The program is limited to a total of $35.8 million in available tax credits per year, a figure that is allowed to rise 20 percent annually.

Latest Stats (2010-11)

  • Students participating: 5,836
  • Schools participating: 206
  • Scholarship organizations: 21
  • Average scholarship value: $1,949

Program Details

Student Funding
STOs provide varying amounts of student aid. Scholarships are capped at $4,900 in grades K-8 and $6,200 in grades 9-12. Those amounts increase annually by $100.

Student Eligibility
All students receiving scholarships under this program must come from families whose household incomes are at or below 185 percent of the federal reduced-price lunch program ($80,601 for a family of four in 2013-14). Additionally, students must either be (1) enrolled in private school kindergarten, (2) enrolled in a private preschool program for students with disabilities, (3) a public school enrollee for at least 90 days in the previous year or one full semester of the current school year, (4) a dependent of an active-duty member of the military, or (5) a prior scholarship recipient under this program or the individual tax-credit scholarship program.

Legal Developments
March 12, 2009, the Arizona Court of Appeals upheld Arizona’s corporate tax-credit scholarships and the Arizona Supreme Court refused to hear an appeal. Green v. Garriott, 212 P.3d 96 (Ariz. App. 2009).

Rules & Regulations
• Income Limit: 185 percent x FRL
• Prior Year Public School Requirement: Yes
• Geographic Limit: Statewide
• Enrollment Cap: None
• Scholarship Cap: $4,900 (K-8), $6,200 (9-12)
• Testing Mandates: None
• Credit Value: 100 percent
• Total Credit Cap: None
• Budget Cap: $35.8 million (escalator)

Governing Statutes
Ariz. Rev. Stat. §§ 43-1183 and 20-224.06

Friedman Contact
Robbie Rhinesmith | robbie@edchoice.org

Related Research

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6/5/2012 The Greenfield School Revolution and School Choice
2/5/2008 Grading School Choice: Evaluating School Choice Programs by the Friedman Gold Standard
10/1/2005 Using School Choice: Analyzing How Parents Access Educational Freedom

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