The Friedman Foundation for Educational Choice

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

Arizona - Original Individual Income Tax Credit Scholarship Program

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

Program Details

Student Funding
Scholarship amounts are determined by STOs.

Student Eligibility
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.

Legal Developments
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

Governing Statutes
Ariz. Rev. Stat. §§ 43-1089 and 43-1089.01

Friedman Contact
Robbie Rhinesmith | robbie@edchoice.org

Related Research

5/30/2014 Public Rules on Private Schools: Measuring the Regulatory Impact of State Statutes and School Choice Programs
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
1/1/2003 Grading Vouchers: Ranking America’s School Choice Programs

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4/4/2011 School Reform News | Supreme Court Upholds Arizona Tax Scholarship Program
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12/7/2010 Christianity Today | School Choice 2.0
9/2/2010 Enlow | Robert Enlow on Lowman Henry's Newsmakers

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