Arizona Tax Credit Scholarships: How Donors Can Give More While Paying Less in Taxes

Arizona was the first state in the nation to create a tax-credit scholarship program back in 1997, and today it remains one of the most generous. If you're an Arizona taxpayer, you can donate to a certified School Tuition Organization (STO) — Arizona's term for an SGO — and receive a dollar-for-dollar state tax credit. That means your donation can cost you essentially nothing out of pocket while funding K-12 scholarships for students who need them.

Four programs, one goal

Arizona runs four separate tax credit programs that fund private school scholarships through STOs. As a donor, the two most relevant are the individual credits:

Original Individual Credit

This is the simplest entry point. Any Arizona individual income taxpayer can donate to a certified STO and claim a credit on their state return.

• Credit: 100% (dollar-for-dollar)
• Max credit (2025): $769 single / $1,535 married filing jointly
• Statewide cap: None — every eligible donor can participate
• No pre-approval required — just donate and claim

Switcher Individual Credit

Once you've maxed out the Original credit, you can donate even more through the Switcher program and get an additional credit.

• Credit: 100% (dollar-for-dollar)
• Max credit (2025): $766 single / $1,527 married filing jointly
• Prerequisite: Must first max out the Original credit
• Statewide cap: None

Combined, a married couple filing jointly can claim up to $3,062 in tax credits for 2025 — and $3,131 for 2026. That's over $3,000 redirected from your state tax bill directly into scholarships.

Corporate credits

Arizona also offers two corporate tax credit programs:

• Low-Income Corporate Credit — up to 100% of corporate tax liability, with a $135 million statewide cap
• Lexie's Law (also called the Disabled/Displaced or "DD" credit) — a $6 million program supporting students with disabilities and those in foster care

Corporate donors must get pre-approval from the Arizona Department of Revenue, and the statewide cap is allocated first-come, first-served starting in July each year.

Why this is different from a deduction

A tax deduction reduces your taxable income. A tax credit reduces your actual tax bill. Arizona's STO credits are dollar-for-dollar, meaning every $1 you donate reduces your Arizona tax by $1.

Key deadlines for donors

Individual donors have flexibility that corporate donors don't:

• Donations made any time during the calendar year qualify for that year's credit
• You can also donate between January 1 and April 15 of the following year and still claim the credit on the prior year's return
• No reservation required — just donate to a certified STO

Corporate donors face tighter timelines:

• Reservation window opens the first week of July each fiscal year
• Credits are allocated first-come, first-served until the cap is met
• Donations must be completed by December 31 (no April 15 extension)

Can you choose where your donation goes?

Sort of. Individual donors may recommend a specific student or school to their STO, but the STO is legally prohibited from awarding scholarships solely based on donor recommendations. You also cannot designate your own dependent — and "swapping" recommendations between donors is prohibited.

Corporate donors may recommend a specific school but not individual students.

In practice, many STOs focus on specific types of schools (faith-based, low-income, special needs) so choosing an STO aligned with your values is the best way to direct your impact.

The impact so far

Since 1997, Arizona's tax credit programs have channeled an estimated $2.9 billion in donations and $2.4 billion in scholarships to K-12 students. In the 2025-26 school year, roughly 61,000 students are receiving STO-funded scholarships across all four programs.

There are currently about 54 certified STOs accepting individual donations, each with its own focus, application process, and school network.

How to donate

1. Browse Arizona STOs in the SGOlist directory to find organizations that match your values
2. Donate directly to the STO of your choice — most accept online donations
3. Claim your credit when filing your Arizona return using Form 323 (Original) and Form 348 (Switcher)
4. Keep your receipt — the STO will provide a donation acknowledgment letter

If you're a corporate donor, start by contacting an STO directly — they'll handle the ADOR pre-approval process on your behalf.

Find an Arizona STO

Ready to make a difference? Browse Arizona School Tuition Organizations on SGOlist to compare organizations, see what types of scholarships they fund, and find the right fit for your donation.

For a deeper dive into Arizona's program details, eligibility rules, and STO listings, visit our Arizona state guide.