The state of Arizona allows taxpayers to redirect their tax liability to school tuition organizations that provide scholarships to students attending private schools. In the case of Catholic Education Arizona, individuals and corporations can direct their tax dollars to the Catholic Education Arizona General Scholarship Fund, which serves Catholic schools with the highest unmet need, or to a Catholic school(s) of their choice.
What exactly is a tax credit and how does the Arizona tax credit work? Here, we’ll dive into the history of tuition tax credits in Arizona and how tax credits can support Catholic education for students in Arizona.
What is tuition tax credit?
A tax credit is a dollar-for-dollar credit for a contribution made to a certified School Tuition Organization like Catholic Education Arizona. Instead of writing a check to the state of Arizona, you can direct your taxes toward scholarships that support a child’s education. The mission of Catholic Education Arizona is to provide scholarships to underserved children to change lives, serve society, and transform culture. Currently, Catholic Education Arizona has awarded over 138,000 scholarships through the Arizona Private Education Tax Credit.
When did Arizona begin the tuition tax credit program?
Arizona passed legislation allowing taxpayers to direct dollars to school tuition organizations in 1997. A School Tuition Organization (STO) is a 501(c)(3) nonprofit organization that awards scholarships to students attending private schools in Arizona with at least 90% of the contributions it receives. In Tax Year 2020, joint filers can contribute up to $2365 and single filers can contribute $1183.
In 2006, an additional tax credit was created allowing C-Corporations, S-Corporations, insurance companies that pay a premium tax, and LLCs that file their state taxes as an S-Corp to participate. As a result, underserved students can attend private schools that best meet their aspirations and educational needs. Corporations can direct 100% of their corporate state tax liability to Catholic Education Arizona on behalf of the Catholic schools in the Diocese of Phoenix, St. Michael Indian School, and Boys Hope Girls Hope of Arizona. The tuition tax credits available for corporations include Credit 335, which is for Low Income Corporate Tax Credit contributions to school tuition organizations, and Credit 341, which is for corporate contributions to school tuition organizations for displaced students and students with disabilities.
There are several reasons to direct your tax credits to Catholic Education Arizona including goodwill in the community, optional name recognition, and more. If you’re interested in learning more about tuition tax credits in Arizona and how directing your tax dollars can create future leaders, contact Catholic Education Arizona today at 602 218-6542 or visit ceaz.org.