Credits for Contributions to Certified School Tuition Organizations

Arizona provides tax credits for contributions made to Certified School Tuition Organizations which provide scholarships to students enrolled in Arizona private schools.  Credits are available for donations made by individual taxpayers and for donations made by corporate taxpayers. 

 

Information for Individual Taxpayers

Two separate nonrefundable tax credits are available to individuals for contributions made to a Certified School Tuition Organization which provides scholarships for students enrolled in Arizona private schools.  An individual who is a shareholder of an S corporation may also claim two separate nonrefundable credits for contributions made by the S corporation when the S corporation qualifies for a corporate credit and elects to pass the credit through to its individual shareholders.

 

Credit for Contributions to Private School Tuition Organizations (Original Individual Income Tax Credit)

This tax credit is claimed on Form 323.

The maximum Original Individual Income Tax Credit donation amount for 2022:
$623 single, married filing separate or head of household; $1,245 married filing joint.

The maximum Original Individual Income Tax Credit donation amount for 2023:
$655 single, married filing separate or head of household; $1,308 married filing joint.

Please Note: Arizona law allows Original Individual Income Tax Credit donations made during 2022 or donations made from January 1, 2023 through April 18, 2023 to be claimed on the 2022 Arizona income tax return.  The maximum credit that can be claimed on the 2022 Arizona return for donations made to School Tuition Organizations for the Original credit is $623 for single, married filing separate and head of household taxpayers, and $1,245 for married filing joint taxpayers. If a taxpayer makes an Original Individual Income Tax Credit donation from January 1, 2023 through April 18, 2023 and wants to claim the higher 2023 maximum credit amount, the taxpayer  will need to claim the credit on the 2023 Arizona return filed in 2024.

 

Credit for Contributions to Certified School Tuition Organizations (Switcher Individual Income Tax Credit)

This tax credit is claimed on Form 348 and is available to individual taxpayers who donate the maximum amount allowed under the Credit for Contributions to Private School Tuition Organizations (Form 323) and make an additional donation to a Certified School Tuition Organization.

The maximum Switcher Individual Income Tax Credit donation amount for 2022:
$620 single, married filing separate or head of household; $1,238 married filing joint.

The maximum Switcher Individual Income Tax Credit donation amount for 2023:
$652 single, married filing separate or head of household; $1,301 married filing joint.

Please Note: Arizona law allows Switcher Individual Income Tax Credit donations made during 2022 or donations made from January 1, 2023 through April 18, 2023 to be claimed on the 2022 Arizona income tax return.  The maximum credit that can be claimed on the 2022 Arizona return for donations made to School Tuition Organizations for the Switcher credit is $620 for single, married filing separate and head of household, and $1,238 for married filing joint taxpayers. If a taxpayer makes a Switcher Individual Income Tax Credit donation from January 1, 2023 through April 18, 2023 and wants to claim the higher 2023 maximum credit amount, the taxpayer will need to claim the credit on the 2023 Arizona return filed in 2024.

 

Credit for Business Contributions by an S Corporation to School Tuition Organizations

This tax credit is claimed on Form 335-I is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization.

 

Credit for Business Contributions by an S Corporation to School Tuition Organizations for Displaced Student or Students with Disabilities

This tax credit is claimed on Form 341-I is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization. 

 

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Information for Corporate Taxpayers

There are two separate nonrefundable corporate tuition tax credits for donations made to Certified School Tuition Organizations which provides scholarships for students to attend Arizona private schools.  Due to the statutory caps on the aggregate amount of credits allowed in a fiscal year, both the low-income corporate tax credits and the disabled/displaced corporate tax credits must be pre-approved by the Arizona Department of Revenue.

 

Credit for Corporate Contributions to School Tuition Organizations (Low-Income)

This tax credit is claimed on Form 335. Corporations interested in making a donation to a Certified School Tuition Organization for the low-income tax credit must contact a School Tuition Organization directly to discuss applying for a corporate credit donation pre-approval. Corporate partners, S corporation individual shareholders and exempt organizations subject to unrelated business taxable income may also be eligible to claim the low-income corporate credit.

The Low-Income Corporate Tax Credit Cap for FY2021/22 is $135,346,407.

 

Credit for Corporate Contributions to School Tuition Organizations for Displaced Students or Students with Disabilities

This tax credit is claimed on Form 341. Corporations interested in making a donation to a School Tuition Organization for the disabled/displaced tax credit must contact a School Tuition Organization directly to discuss applying for a corporate credit donation pre-approval. Corporate partners, S corporation individual shareholders and exempt organizations subject to unrelated business taxable income may also be eligible to claim the disabled/displaced corporate credit.

The Disabled/Displaced Corporate Tax Credit Cap each fiscal year is $6,000,000.

 

Pre-Approval of Corporate Donations to School Tuition Organizations

Corporations interested in making a donation for either corporate credit must contact a School Tuition Organization directly to discuss applying for a corporate credit donation pre-approval. School Tuition Organizations submit the corporate donation application for credit pre-approval to the Arizona Department of Revenue.  Pre-approval applications submitted by a corporation to the Arizona Department of Revenue will not be accepted.

 

Resources

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