As parents, we all want the absolute best for our children, especially when it comes to their education. Growing up, I had the opportunity to attend my local public school from Kindergarten through 12th grade but I also had several friends who had the chance to attend private schools in our area. There were times when I was invited to events at these schools, from sports competitions to dances, even a few academic presentations and plays. I was aware, even as a child, that these schools were different. Some had a larger variety of offerings available to their students, even when the student body was significantly smaller. Some had a special focus, like academics or fine arts. That was over twenty years ago and since then, Arizona has blossomed into a state with even more private school options! In addition, every family now has the opportunity to afford private school with the support of Tuition Tax Credits. Yes, you have to apply and yes, it can be work! But millions of dollars are available every year to support families looking to send their children to private school. Let’s talk about how it works:
Tuition Tax Credits – The Basics
In Arizona, individuals and corporations can receive a dollar-for-dollar tax credit by contributing to a certified School Tuition Organization, often called an “STO”. A complete list of STOs is available on the Arizona Department of Revenue Website. You can also search for STOs on the Arizona School Tuition Organization Association (ASTOA) website. Families can apply for scholarship funds from multiple STOs, and private schools often supply training and support to families interested in funding their child’s education in this way. Each STO has different deadlines and might have slightly different application procedures, which is why it’s important to ask the private school you’re interested in attending which STOs they generally work with. You don’t want to spend time applying somewhere that doesn’t usually fund scholarships to the school you may be interested in.
The Four Types of Tuition Tax Credits
There are four types of tuition tax credits currently available in Arizona: Individual, PLUS or “Overflow/Switcher”, Corporate and Disabled/Displaced. Let’s review details about who qualifies for each one.
Individual – The “individual” or “original” tuition tax credit program allows any Arizona taxpayer to direct a portion of their state tax liability to a qualified STO and then receive a dollar-for-dollar tax credit for their contribution. This isn’t a tax deduction, this is a dollar-for-dollar credit. The STO that an Arizona resident has chosen to contribute to then allocates 90% of contributions back to applying students in the form of a scholarship for private school. For tax year 2021, individuals can contribute up to $593 to a qualifying STO, and married couples can contribute up to $1,186. Any student choosing to attend a qualified Arizona private school is eligible. There is no income qualification or cap.
PLUS, also known as “Overflow” or “Switcher” – Arizona taxpayers with state tax liability that is greater than the maximum amount mentioned above can participate in this program. For tax year 2019, an individual can contribute up to $590 and a married couple filing jointly can contribute up to $1,179. (Taxpayers must first give the maximum under the Individual Tuition Tax Credit Program, anything over that amount “rolls over” into the PLUS Program). This means that between both programs, individual taxpayers can contribute up to $1,183 and married couples filing jointly can contribute up to $2,365 AND receive 100% dollar-for-dollar tax credit. This program is specifically for Preschool students with disabilities, students who are entering Kindergarten or students leaving an Arizona public school and choosing to attend a private school.
Corporate – The Corporate Tuition Tax Credit Program allows any certain Arizona businesses to direct 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 dollar is then awarded by the STO via scholarships to students who choose to attend a private school. The Corporate Tuition Tax Credit Program does have a total contribution cap, so it’s helpful for corporations to check with their accountant to make sure they contribute on time. Students receiving scholarships under this program must have a household income below 185 percent of the income eligible for free and reduced price lunch (185 percent of the Federal Poverty Level). Students must also have previously attended a public school or be entering kindergarten.
Disabled/Displaced – The “Disabled/ Displaced” program is also known as “Lexie’s Law” and it allows any Arizona Corporation to direct 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 dollar is then awarded by the STO via scholarships to students who choose to attend a private school. The Lexie’s Law Program is capped at $5,000,000 a year. Students in Preschool through 12th grades are eligible for this scholarship if they have ever received an IEP (Individualized Education Plan) or 504 plan from a public school. Students (K-12) who have ever been in the Arizona foster care system are also eligible.
Love Your School Is Here to Help You!
The process of applying for tuition tax credits can feel overwhelming at first, but it doesn’t have to be! Love Your School is here to help answer your questions and provide you personalized support if you’re curious about tuition tax credits for your child. We can also connect you directly with specific STOs when needed. Check out our Families page to read about other families who utilize tuition tax credits to pay for private school, right here in Arizona. Their stories offer encouragement and advice, and are worth reading for those who might be new to the process!
As always – we’re here to help! Don’t hesitate to send us an email, or message us through Facebook or social media. We can’t wait to hear from you!