Corporations, too, can use the Arizona Tax Credit to fund private schools at no cost to them

In my post below (dated August 28, 2019), I show how individual taxpayers can use the Arizona Tax Credit to fund private and charter schools at no cost to them. Getting individuals to use the program is still an urgent priority because the state-wide takeup is so low. I say “at no cost” because the law permits us to divert money from our Arizona income tax liability to schools and other charities. If you give $100, your tax bill is reduced by $100. The Tax Credit is the best tool we have to undermine the monopoly over education now held by the Arizona Education Association (AEA).

Individual giving via the Credit is limited by statute at the level of the individual. For example, a couple filing jointly in 2019 could give up to $2,269. Corporate giving is limited in the aggregate. It is presently capped by the Legislature at just over $100 million. The program is popular: the cap is reached so quickly that there is a race to qualify at the beginning of July, when the window opens. Even if you fail to qualify, your attempt builds pressure on the Legislature to raise the cap.

You must give through a School Tuition Organization (STO), of which there are many (link here), with varying specialties and capabilities. I use the Arizona School Choice Trust ( because I know the staff and because they can direct my gift to local private schools, such as Desert Gardens Montessori and St Timothy’s Catholic School.

Giving via STOs is intended to benefit students from lower-income families. Eligibility is tied to the same rules that govern the nationwide school lunch program. For example, a family of four can have annual income of as much as $48,000, and get a 90% scholarship. That family can have income as high as $89,000 and get a 50% scholarship.

The AEA claim that school choice programs like the Tax Credit drain money from the district school system. They are correct in the following sense: both federal and state aid to education follow the student. If the student leaves a district school (for a private or a charter school) that district loses the aid associated with that student, and they no longer have the marginal costs, but they are stuck with the physical plant and the teachers’ pensions. The AEA may also reasonably fear that voters in a district with active school choice may be reluctant to approve school bond issues and overrides. This subject is worth a separate post.