Private School Tax Credits

There are 3 tax credit programs available to Arizona taxpayers and families in support of educational choice. A detailed explanation of STO requirements for each of these programs can be found here.

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Individual Tuition Tax Credit Program

A.R.S. 43-1089 | A.R.S. 43-1089 (Eff. 1/1/11) | A.R.S. 43 Ch. 16 (Eff. 1/1/11)

The Individual Tuition Tax Credit Program allows any Arizona taxpayer to redirect a portion or all of their state tax liability to a School Tuition Organization and receive a 100% dollar-for-dollar tax credit for their contribution. This is a tax CREDIT for supporting school choice, not a tax deduction. At least 90% of every redirected dollar is then awarded by the STO to students who choose a private school that is qualified under the program.

The maximum credit allowed for married taxpayers is $2134 and for single taxpayers is $1067 for 2015. In 2009, over 73,000 taxpayers redirected over $50,800,000 to this program and over 27,000 students received scholarships to attend the private school of their choice. A recent study, conducted by Dr. Vicki Murray with the Pacific Research Institute, demonstrated that the program primarily benefits low-and-middle income families, and that the program dramatically expands the ability of parents to select the best schools for their children-public, private, independent, or religious.


Corporate Tuition Tax Credit Program

A.R.S. 43-1183 | A.R.S. 43 Ch. 15 (Eff. 1/1/11)

The Corporate Tuition Tax Credit Program allows any Arizona Corporation to redirect a portion or all of their state corporate tax liability to a School Tuition Organization and receive a 100% dollar-for-dollar tax credit for their contribution. This is a tax CREDIT for corporations supporting school choice, not a tax deduction. At least 90% of every redirected dollar is then awarded by the STO to students who choose a private school that is qualified under the program.

The statewide cap on corporate credits for the 2014-2015 school year is $52 million, given on a first-come, first-serve basis. In 2009, Arizona corporations redirected over $7.2 million to this program and over 2,900 students received scholarships to attend the private school of their choice. Students receiving scholarships under this program must have family incomes below 185 percent of the income eligible for free and reduced price lunch, which in turn is set at 185 percent of the federal poverty level (meaning a final program eligibility cutoff of $83K for a family of four in 2015) and must have previously attended a public school or be entering kindergarten.


Disabled/Displaced Pupils Corporate Tax Credit Program (Lexie’s Law)

A.R.S. 43-1184 | A.R.S. 43 Ch. 15 (Eff. 1/1/11)

Lexie’s Law allows any Arizona Corporation to redirect a portion or all of their state corporate tax liability to a School Tuition Organization and receive a 100% dollar-for-dollar tax credit for their contribution. This is a tax CREDIT for corporations supporting disabled/displaced students, not a tax deduction. At least 90% of every redirected dollar is then awarded by the STO to students who choose a private school that is qualified under the program.

The statewide cap on Lexie’s Law corporate credits for the 2014-15 school year is $5 million, given on a first-come, first-serve basis. In 2009, Arizona corporations redirected $781,000 to this program and over 350 students received scholarships to attend the private school of their choice. Students are eligible for special needs scholarships if they have been enrolled in public school for the previous school year and are taught with an Individualized Education Plan (which is mandated by the Individuals with Disabilities Education Act). Students are eligible for displaced pupil scholarships if they have been placed in foster care at any time prior to graduating from high school. Students do not need to be currently enrolled in a public school to participate.