Enacted 1997 • Launched 1997 • Tax-Credit Scholarship
Arizona provides a credit on individual income taxes for donations to School Tuition Organizations
(STOs), nonprofits that provide private school scholarships. In the 2014 tax year, individual taxpayers
contributing to STOs may claim a dollar-for-dollar credit of up to $528, and married couples filing
jointly may claim up to $1,056. The amount an individual can claim for a credit increases each year by
the amount the Consumer Price Index changes.
Latest Stats (2011-12)
- Scholarships awarded: 23,959
- Schools participating: 347
- Scholarship organizations: 49
- Average scholarship value: $1,910
Scholarship amounts are determined by STOs.
Students must be in grades K-12 or be a preschool enrollee identified by the school district as having
a disability under the Individuals with Disabilities Education Act or Section 504 of the Rehabilitation
Act. STOs must consider financial need when awarding scholarships and cannot make decisions based
solely on donor recommendations. Individual taxpayers may not make STO contributions earmarked
for their own dependents, nor may donors make agreements among one another to “trade” donations
for their respective dependents.
April 4, 2011, the U.S. Supreme Court upheld Arizona’s personal tax-credit scholarships, ruling that
taxpayers do not have standing under the Establishment Clause to challenge a tax-credit scholarship
program. The Court rejected opponents’ position that personal income is government property, stating,
“Respondents’ contrary position assumes that income should be treated as if it were government property
even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence.
Private bank accounts cannot be equated with the Arizona State Treasury.” Arizona Christian Sch. Tuition
Org. v. Winn, 131 S. Ct. 1436, 179 L. Ed. 2d 523 (2011).
Rules & Regulations
• Income Limit: None
• Prior Year Public School Requirement: None
• Geographic Limit: Statewide
• Enrollment Cap: None
• Scholarship Cap: None
• Testing Mandates: None
• Credit Value: 100 percent
• Total Credit Cap: Yes
• Budget Cap: None
Ariz. Rev. Stat. §§ 43-1089 and 43-1089.01
Leslie Hiner | email@example.com
How to apply: http://www.azdor.gov/TaxCredits/SchoolTaxCreditsforIndividuals.aspx