Enacted 2006 • Launched 2006–07
Arizona provides a credit on corporate income taxes for donations to School Tuition Organizations (STOs), privately run non-profit organizations that distribute private school scholarships. This program is modeled after Arizona’s existing individual tax credit for donations to STOs; the two programs work in tandem. All organizations registered as STOs may participate in both programs. Corporate taxpayers contributing to STOs may claim a tax credit equal to the full amount of their contribution. In 2010–11, a total of 17 STOs participated in the program and awarded scholarships.
Latest Stats (2010)
- Students Participating: 4,215
- Schools Participating: 187
- Average Scholarship Value: $2,212
Program Details
Program Type
Tax-Credit Scholarship
Scholarship/Voucher Value
STOs provide varying amounts of student aid. In 2010, the average scholarship awarded was worth $2,212. Scholarships are capped at $4,700 in grades K–8 and $6,000 in grades 9–12. Those amounts increase annually by $100.
Participation
For school year 2010, 4,215 scholarships worth a total of $9,322,231 were awarded. The program is limited to a total of $10 million worth of tax credits per year per donor, a figure that is allowed to rise by 20 percent annually.
Student Eligibility
Students receiving scholarships through the corporate tax credit program must have family incomes below 185 percent of the income eligible for reduced price lunch (meaning a final program eligibility cutoff of $76,493 for a family of four in 2011). Participants also must previously have attended a public school or be entering kindergarten. The income requirement does not apply to Arizona’s other tax-credit scholarship program, which is funded by individuals rather than by corporate donors. Each STO may set its own eligibility guidelines. Most STOs give to students based solely on financial need, sometimes concentrating on a specific location or school system.
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% x FRL
- Geographic Limit: Statewide
- Enrollment Cap: None
- Scholarship Cap: None
- Testing Mandates: Yes-National
- Credit Value: 100%
- Credit Cap: None
- Program Cap: Escalator
Governing Statutes
Title 43-1183 of the Arizona statutes
Additional Links
Arizona Department of Revenue's 2009 Report
