Location:

What is an STO?

What’s an STO?

Many families don’t realize that a private school education in Arizona can  be very affordable. Tax credit scholarship programs give families with limited financial means the ability to enroll their children in the private school that works for their child and meets their unique needs. Thousands of Arizona children are benefiting from Arizona’s tuition tax credit programs as they attend the private school that works for them.

Tuition Tax-Credit Scholarships are often referred to as “STOs” for short. STOs are School Tuition Organizations that are authorized by the state to collect tax credits and distribute them to schools and students. You can find a complete list of registered tax credit organizations that can process individual tax credits and offer scholarships here


How do STOs work? 

1. An Arizona resident donates to an STO and can recommend a school or student(s) as the recipient(s). 

2. The donor gets a state tax credit document and then receives those funds back, dollar for dollar, after their state taxes are filed. 

3. Families can apply for scholarships from one or more STOs. 

4. STOs issue notices of awards on a quarterly or monthly basis. 


How do I get my child recommended for donations? 

Ask your friends and family via text, making a phone call, sending postcards, or posting on social media. Grandparents, aunts, uncles, and friends LOVE to donate to an STO for tax credit and recommend your child. Just check with your chosen STO for the specific directions to pass on to your friends and family. *Important note: You cannot trade or give tax credit scholarship recommendations with anyone on the condition of receiving one from them – i.e. – you can’t swap recommendations. 

So, what are my Tax Credit options? 

There are several Tax Credit options in Arizona! Usually the STO application process is easy and allows you to apply at the same time to each scholarship option that you may qualify for simply by checking a box. Families may qualify for one, or all of these tuition tax credit scholarship options:

1. Original Individual Income Tax Credit

2. Switcher Individual Income Tax Credit

3. Corporate Low Income Tax Credit

4. Corporate Displaced Student or Students with Disabilities Tax Credit (DD STO)


ORIGINAL Individual Income Tax Credit Scholarship

Eligibility: You can apply for this tax credit scholarship if your school is a partner school to the STO. Every student can apply under the Original tax credit. 

Students can receive scholarships from this category up to the amount of the school’s posted tuition. Most STOs honor student recommended dollars and parents tell their friends and family where to give, and direct their tax credits to one STO, and then they apply from that STO. Please note: all STOs have different application deadlines, but most are open for the fall semester around March – April. 


SWITCHER Individual Income Tax Credit Scholarship


Eligibility:
You can apply for this tax credit scholarship if your school is a partner school to the STO – plus every student who meets at least one of the following eligibility criteria qualifies for switcher:

  • Your student attended a public school (district or charter) for 90 days in the prior year then transferred to a private school. 
  • Your student is currently enrolled in Kindergarten at a private school.
  • Your student is a dependent of a member of the U.S. Armed Forces who are stationed in Arizona under military orders. 
  • Your student previously received a Switcher or Corporate Scholarship in a prior year and has attended the private school continuously since then. 
  • Your student was homeschooled immediately before they enrolled in a private school
  • Your student moved to Arizona from out of state immediately prior to enrolling in a private school
  • Your student was in the Arizona ESA program and did not renew their contract or has left the program in order to accept a scholarship from an STO. 


“Corporate Low Income” Tax Credit Scholarship


Eligibility:
You can apply for this tax credit scholarship if you meet at least one criteria from List 1 and List 2 below and can provide tax documentation:

List 1 (you need to meet at least one of the criteria below):

  1. Your student was a switcher – a student who has switched from an Arizona public school (district or charter) after having attended for at least 90 days in the prior school year or they were homeschooled prior to enrolling in private school or they moved to Arizona from out of state immediately before entering private school or they were in the ESA program and did not renew their contract or have left the program in order to accept a scholarship from an STO. 
  2. Your student is starting kindergarten at an Arizona private school or is a Pre-K student with a disability, who has an IEP or MET from the public school district, and attends a private school that provides services for their disability. 
  3. Your student is a dependent of a member of the U.S. Armed Forces who are stationed in Arizona under military orders. 
  4. Your student has received a scholarship in the prior school year from any tax credit scholarship program and has continued in a private school.

List 2 (you need to meet at least one of the criteria below):

  1. Your family is considered low income because your total household income is 185% or less of the income set by FRPL (free and reduced price lunch) guidelines. Check out the chart below to evaluate if you meet the low income requirement. 

Income Guidelines for the 2023-2024 School Year

Household Size

Annual Gross Income (185% of federal poverty level)

Your income can not be higher than this column to qualify for the low income Tax Credit Scholarship

1

$26,973

$49,900

2

$36,482

$67,492

3

$45,991

$85,083

4

$55,500

$102,675

5

$65,009

$120,267

6

$74,518

$137,858

7

$84,027

$155,450

8

$93,536

$173,042

Additional household member

$9,509

$17,592


Corporate Displaced Student or Student with Disabilities Tax Credit (DD STO)


Eligibility:
You can apply for this tax credit scholarship if you meet one of the following criteria from the lists below:

  1. Disabled – your student is identified as having a disability under Section 504 of the Rehabilitation Act or by a school district. You will need to provide a copy of the Individualized Education Plan (IEP), 504 Plan, or the Multidisciplinary Education Team (MET) report document that was issued by an Arizona public school. Out-of-state documents do not qualify. The documents do not have to be current.
  2. Displaced – your student was or is currently placed by the Arizona Foster Care system at any time prior to high school graduation. The category often requires a form to be completed by the parent verifying displacement. 

Scholarship amount – The scholarship award amount that you can receive under DD STO depends on the child’s qualifying disability diagnosis on their MET/IEP/504 plan. The amount is calculated from a charter that the Arizona Department of Education provides to the Arizona Department of Revenue for STOs and is equal to 90% of what that year’s state based aid is for that child’s disability diagnosis.

For Example: If you have a child with dyslexia – the max amount of DD STO funds they can receive from one, or more STOs  is around $6,600. They can not receive more than this, and most families apply to several STOs to get up to that max amount that is set by the state. These funds can be stacked with the individual and switcher funds.


STO FAQ’s


When can I apply? 
 Every STO has different opening and closing dates for their scholarship applications. Most open in the spring, but some are open year-round. Talk to your STO(s) to confirm application dates!

Can I recommend my own child when I donate to an STO? No, sadly you cannot recommend your own child. But you can ask grandparents, aunts, uncles, and friends to recommend them!

Can I trade recommendations with my friends?  No. You cannot make an agreement with a friend to trade STO recommendations.

What is the average dollar amount of a tax-credit scholarship? It depends on the scholarship you choose/qualify for and how much recommended dollars have been given to any STO for your family or school. Here are some broad guidelines:

  • ORIGINAL Individual Income Tax Credit Scholarship: Students can receive scholarships from this category up to the amount of the school’s posted tuition, based on funds available and recommended dollars to your student. 
  • SWITCHER Individual Income Tax Credit Scholarship: Up to the amount donated with a recommendation for your child! Students can receive scholarships from this category up to the amount of the school’s posted tuition.
  • “Corporate Low Income” Tax Credit Scholarship: Up to the amount of the posted tuition but no single STO can give over the Arizona Dept. of Revenue maximums that are listed each year.
      • For example: Scholarship Limit per STO for Kindergarten through 8th grade is $5,900 and 9th through 12th grade is $7,700. No STO can give over these amounts, but parents can receive multiple low-income scholarships from multiple STOs, up to the amount of tuition. These numbers are for the 2022-23 school year. New numbers will be given by the AZ Dept. of Revenue in May 2023.
  • Corporate Displaced Student or Student with Disabilities Tax Credit (DD STO): The scholarship award amount that you can receive under DD STO depends on the child’s qualifying disability diagnosis on their MET/IEP/504 plan. The amount is calculated from a charter that the Arizona Department of Education provides to the Arizona Department of Revenue for STOs and is equal to 90% of what that year’s state based aid is for that child’s disability diagnosis. Each STO has a chart that they use to calculate this amount, but it is not listed publicly. You must reach out to the STO for amounts.
      • For Example: If you have a child with dyslexia – the max amount of DD STO funds they can receive from one, or more STOs  is around $6,600. They can not receive more than this, and most families apply to several STOs to get up to that max amount that is set by the state. These funds can be stacked with the individual and switcher funds. 

How do I switch from an ESA to an STO? You go through the same process as any ESA applicant! However, you can’t accept both in the same year anymore per ADE changing their policy on this as of April 2023.

- Love Your School

Founder & Executive Director

Recent Articles