Original Individual Income Tax Credit Scholarship Program

  • Tax-Credit Scholarship
  • Enacted 1997
  • Launched 1997

Arizona offers tax credits to individuals supporting School Tuition Organizations (STOs), nonprofits that provide private school scholarships to students in need. This tax-credit scholarship program allows taxpayers to receive tax credits for their donations to nonprofit organizations that provide school scholarships to K–12 students. Students can 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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  • 1st

    America’s First Tax-Credit Scholarship Program

  • 23,826

    Scholarships Awarded (202324)

  • 100%

    of Families with Children Eligible Statewide

  • 350

    Participating Schools (202324)

  • 49

    Scholarship Organizations Awarding Scholarships (202122)

  • $2,093

    Average Scholarship Value (202122)

  • 20%

    Value (Average Scholarship) as a Percentage of Public School Per-student Spending

Arizona’s Original Individual Income Tax Credit Scholarship Program Participation*

Scholarships Awarded
Calendar/School Year

Student Funding

School tuition organizations (STOs) determine scholarship amounts. In tax year 2024, individual taxpayers who contribute to STOs may claim a dollar-for-dollar credit of up to $731, and married couples filing jointly may claim up to $1,459. The amount an individual can claim for a credit increases each year by the amount of the Consumer Price Index.

(Last updated December 14, 2023) 

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.

(Last updated December 14, 2023) 

EdChoice Expert Feedback

Arizona’s original individual-donor tax-credit scholarship program—the first in the nation—helps tens of thousands of students access schools that are the right fit for them, but policymakers could do more to expand educational opportunity.

All students are eligible to receive a tax-credit scholarship, making this among the most expansive educational choice programs in the nation. Statewide, less than 10 percent of students participate in one of Arizona’s private educational choice options (including the Low-Income Corporate-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 $2,000, which is about 20 percent of the average expenditure per student at Arizona’s district schools, but there is no cap on scholarship values and students may receive multiple scholarships. Students with special needs, students in foster care, students from low-income families, and those who have switched from the public school system can also receive scholarships via the other tax-credit scholarship programs. Tax credits are worth 100 percent of the value of the contributions to scholarship organizations, but donors may only claim up to $731 in tax credits annually (or up to $1,459 for married couples filing jointly).

To expand access to educational choice, Arizona policymakers should increase the amount of tax credits that individual donors can receive.

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

(Last updated December 14, 2023) 

Rules and 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 
  • Per Donor Credit Cap: $731 (individual) / $1,459 (married) 
  • Total Tax Credit Cap: None 

STO Requirements: 

  • Use at least 90 percent of contributions for scholarships 
  • Make scholarships available for more than one school 
  • May allow donors to recommend student beneficiaries but shall not award, designate or reserve scholarships solely on the basis of donor recommendations 
  • Cannot exchange recommendations of student beneficiaries with other donors 
  • Report annually to the state:  
    • Data on accepted contributions, grants awarded, the dollar amount of scholarships granted to students who qualify for the free or reduced-price lunch program, the dollar amount of scholarships granted to those students whose household income falls between 185 percent and 342 percent of the federal poverty level ($51,338 and $94,905 for a family of four in 2022–23)  
    • 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. §§ 43-1089; 43-1601 through 1605

(Last updated December 14, 2023)