Original Individual Income Tax Credit Scholarship Program

Any student attending a private school grades K–12 is eligible to receive a tax-credit scholarship in Arizona’s Original Individual Income Tax Credit Scholarship program. Pre-kindergarten students with disabilities are eligible if attending a qualified school that offers needed services for any of the following conditions: hearing impairment; visual impairment; developmental delay; preschool severe delay; or speech and/or language impairment. Taxpayers may not make STO contributions earmarked for their own dependents. To be eligible, kindergarten students must be age 5 by January 1 of their kindergarten school year. Students must attend the private school full-time to participate. A student who receives Empowerment Scholarship Account (ESA) money from the Arizona Department of Education is not eligible for an original individual tax-credit award. Students may receive multiple tax-credit scholarship awards or receive awards from multiple tax-credit scholarship programs as eligible. _(Last updated July 15, 2024)_

Funds from STO scholarships are used to pay for tuition at qualified private schools for full-time enrollment. _(Last updated July 15, 2024)_

Private donors fund this program by donating to STOs receiving tax credits for their donation, up to certain limits. STOs determine scholarship amounts. These amounts may vary depending on the STO to which a student applies for a scholarship. Students may receive more than one scholarship from STOs. Scholarship values are capped at the school’s tuition but multi-year tuition scholarships are permitted, and scholarships can be combined. Tax credits are worth 100% of the value of the contributions to the scholarship organizations. 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 credit limit is adjusted annually, on or after January 1, using the Consumer Price Index published by the United States Bureau of Labor Statistics, except that the dollar amount cannot be reduced from the prior taxable year. This credit is not available to corporations. _(Last updated July 15, 2024)_

On January 26, 1999, the Arizona Supreme Court upheld the constitutionality of this tax-credit scholarship program. This decision was appealed to the U.S. Supreme Court, which, in October 1999, declined to review the case. The Arizona Supreme Court ruling was allowed to stand._Kotterman v. Killian_ , 972 P.2d 606 (Ariz. 1999), cert. denied, 528 U.S. 921 (1999) On April 4, 2011, the U.S. Supreme Court, in a landmark decision, upheld Arizona’s personal tax-credit scholarships, ruling that taxpayers do not have standing under the U.S. Constitution’s First Amendment Establishment Clause to challenge a tax-credit scholarship program. The court rejected opponents’ position that personal income is government property, declaring: “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) _(Last Updated July 15, 2024)_