Arizona’s “switcher” tax-credit scholarship program was enacted and launched in 2012. The law allows donors to receive tax credits for their donations to school tuition organizations, nonprofits that give private school scholarships to students. In tax year 2018, individual taxpayers that contributed to STOs under this switcher may claim a dollar-for-dollar credit of up to $552, and married couples filing jointly may claim up to $1,103. However, taxpayers must first donate the maximum credit amount for the Original Individual Income Tax Credit ($555 individual, $1,110 joint in tax year 2018) before they may claim the switcher credit. Learn more about how the program works on this page, including eligibility, funding, regulations and more.
Arizona offers tax credits to individuals supporting school tuition organizations (STOs), nonprofits that provide private school scholarships to students in need.
STOs determine scholarship amounts.
Students must be in grades K–12 and have previously attended a public school for at least a full semester or 90 days 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. Additionally, students
who are in kindergarten, children of active military members stationed in Arizona and previous recipients of a Low-Income Corporate Income Tax Credit Scholarship or “Switcher” Individual Income Tax Credit Scholarship who have remained in private school are eligible. Although students are not means-tested for eligibility, 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.
Arizona’s switcher tax-credit scholarship program, in conjunction with its Original Individual Income Tax Credit Scholarship Program, is one of the most expansive programs in the nation. It does not restrict eligibility based on arbitrary family income levels. However, the program does require that an eligible student have previously attended a public school for at least a full semester or 90 days or be a preschool enrollee identified by the school district as having a disability. The program excels by not restricting the amount a scholarship can be worth. Another plus of Arizona’s switcher program is the lack of red tape placed on participating schools, which must comply with the state’s private school regulations, including health, safety and nondiscrimination requirements. Lawmakers could improve the program by raising the cap on the amount individual and joint taxpayers can claim as a credit. This improvement would allow for more donations to STOs, which would, in turn, allow those STOs to increase the number of scholarships and the amount of each scholarship they award.
Ariz. Rev. Stat. § 43-1089.03
No legal challenges have been filed against the program.
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