Low-Income Corporate Income Tax Credit Scholarship Program

  • Tax-Credit Scholarship
  • Enacted 2006
  • Launched 2006

Arizona offers tax credits to businesses supporting school tuition organizations (STOs), nonprofits that provide private school scholarships to low-income students in need. Students may receive more than one scholarship from STOs in a given year. Learn more about the program on this page, including eligibility, funding, regulations, legal history and more.

We do not administer this program.

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  • 29,582

    Scholarships Awarded (202324)

  • 65%

    of Families with Children Income-Eligible Statewide

  • 291

    Participating Schools (202324)

  • 47

    Scholarship Organizations Awarding Scholarships (202122)

  • $3,834

    Average Scholarship Value (202324)

  • 31%

    Value as a Percentage of Public School Per-student Spending

Arizona’s Low-Income Corporate Income Tax Credit Scholarship Program Participation

Scholarships Awarded
School Year Ending

Student Funding

Each school tuition organization (STO) determines the amount of scholarships it distributes. Scholarships were capped at $6,000 in grades K-8 and $7,900 in grades 9-12 for 2023-24. Those amounts increase annually by $200. Corporate taxpayers who contribute to STOs may claim a tax credit equal to the full amount of their contribution. The program is limited to a total of $158.5 million in available tax credits in 2023-24.

(Last updated December 14, 2023) 

Student Eligibility

All students who receive scholarships under this program must come from families whose household incomes are equal to or below 185 percent of the federal free and reduced-price lunch program (FRL) guidelines (the equivalent of 342.25 percent of the federal poverty line, or $102,675 for a family of four in 2023-24). 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 stationed in Arizona, (5) a prior scholarship recipient under this program or the individual tax-credit scholarship program, (6) homeschooled prior to enrolling in a private school, (7) moved to Arizona from out of state before enrolling in a private school, or (8) previously participated in the Empowerment Scholarship Account program (but is no longer participating in that program).

(Last updated December 14, 2023) 

EdChoice Expert Feedback

Arizona’s low-income corporate-donor tax-credit scholarship program helps tens of thousands of students access schools that are the right fit for them, but policymakers could do more to expand educational opportunity.

Eligibility for the scholarships is limited to 342.25 percent of the federal poverty line. Nearly 60 percent of Arizona students are eligible to receive a scholarship via this program, and all students are eligible to receive a scholarship via the individual-donor scholarship program. Statewide, fewer than 10 percent of students participate in one of Arizona’s private educational choice options (including the universal-eligibility Original Individual-Donor Tax-Credit Scholarship Program, the “Switcher” Tax-Credit Scholarship Program, Lexie’s Law for Disabled and Displaced Students Tax-Credit Scholarship Program and the Empowerment Scholarship Account Program). The average scholarship size is only about $2,971, which is only about 34 percent of the average total expenditure per student at Arizona’s district schools, but there is no cap on scholarship values and students may receive more than one scholarship. Students with special needs, students in foster care and those who have switched from the public school system can also receive scholarships via the other tax-credit scholarship programs, in addition to the original scholarship program that is available to all students. Tax credits are worth 100 percent of the value of the contributions to scholarship organizations, but only $158.5 million in tax credits are available annually, which is equivalent to only 1.3 percent of Arizona’s total K-12 revenue.

To expand access to educational choice, Arizona policymakers should increase the amount of tax credits available and restore the automatic “escalator” that allowed the total tax credit cap to grow over time to meet demand.

Arizona’s scholarship program generally avoids unnecessary and counterproductive regulations.

(Last updated December 14, 2023) 

Rules and Regulations

  • Income Limit: 185 percent x FRL
  • Prior Year Public School Requirement: Yes
  • Geographic Limit: Statewide
  • Enrollment Cap: None
  • Scholarship Cap: $6,000 (K–8), $7,900 (9–12) in 2023
  • Testing Mandates: None
  • Credit Value: 100 percent
  • Per Donor Credit Cap: None
  • Total tax Credit Cap: $158.5 million in 2023

STO Requirements:

  • Use at least 90 percent of contributions for scholarships
  • Make scholarships available for more than one school
  • Must allow the state to verify that scholarships are awarded to students who attend a qualified school
  • Report annually to the state:
    • data on accepted contributions, grants awarded, and the amount of money being held for identified student scholarships in future years
    • a list of participating schools with the number and dollar amount of scholarship awards received
    • the salaries of the STO’s top three officials for the fiscal year and proof of independent review of financial statements by a certified public accountant

(Last updated December 14, 2023) 

Governing Statutes

Ariz. Rev. Stat. §§ 43-1183; 43-1501 through 1507; and 20-224.06

(Last updated December 14, 2023)