How Arizona's Tax Credit Works

How Arizona's Tax Credit Works
March 1, 1999



Author: Idea conceived by former lawmaker Trent Franks.

Eligibility: Any individual who pays taxes to the State of Arizona. Donations made in a specific year are reported on tax returns for that year.

Cost: The Arizona Department of Revenue has estimated the annual cost to the state of both private and public school credits at $60 million.



Private School Credits

Amount: Dollar-for-dollar credit up to $500 against Arizona income taxes for donations to charitable groups that provide scholarships to students at private schools. Unused credits may be carried forward for up to five years.

Limitations: Donations cannot be earmarked for a specific student nor can contributions be used for the direct benefit of a donor's children.



Public School Credits

Amount: Dollar-for-dollar credit up to $200 against Arizona income taxes for donations to pay for extracurricular activity fees at public and charter schools.

Reporting: Each school must issue receipts for payment of fees and report annually on contributions and their uses.