In the state of Arizona, the maximum tax credit for a single individual or head of household is $200. For individuals who are married or filing jointly, the tax credit is $400. And these donations may be split among more than one public school in Arizona. But will still qualify for a maximum credit of $400.
As Tax season draws near, More private-school tuition organizations are out in public communities pitching Arizona taxpayers to donate to them. Rather than paying their hard-earned cash to the state of Arizona in form of taxes. This goes the same for public schools in their neighborhoods. Looking into this, here’s how Arizona school credit programs work, who benefits from it, and how it affects the state’s funding of public district schools and charter schools.
Private-school Student Tuition Organization (STO)
Donations of individuals and corporations under Arizona law, states that these contributions get a dollar for dollar credit on taxes for giving to non-profit school tuitions organizations. These STOs give out scholarships to students who attend private schools, maintaining 10 percent of the fund for salaries and other administrative costs.
Some of these STOs provide scholarships that are based on the income of the family of an applying student, and others have no income restrictions. The State law does not allow funds to be given to any specific child. Yet other STOs do allow donors to recommend to which particular child they’d want their donations to go.
Public School Tax Credit
The public school tax credit program in Arizona allows taxpayers to get a dollar-for-dollar credit on their taxes. Credits for donating directly to a public district school or charter school. Yet donors do not have to donate to their own child’s school or a school near them. These schools can then only use the funds for extracurricular activities, character education, standardized testing and fees, careers and technical education assessment, CPR training. Activities must be viewed as eligible by the state law.
These school tax credit programs may affect the overall money in the state general fund, but do not pull money directly from the k-12 education budget. The general fund is then used by the governor to determine how much additional funding is got every year, above what is required based on the number of students and inflation by K-12 districts schools and charter schools.
This is a financial gain for the state of Arizona, due to the lesser scholarship per student cost enrolled in a public school rather than paying the enrollment of students in a public school. The number of scholarships is the only being disclosed, not the number of students who participate in the program. And many students even receive multiple scholarships, possibly even more from what they will get from the state if they just attend a private school.
Some critics even stated that private-school programs drain the general fund because the majority of these children would have been on the state-school rolls. Over the past decade, studies have shown that private-school enrollment has not increased due to the growth of many scholarship programs in the state. School tax credit programs may not directly affect public schools and public district schools around low-income areas because local property taxes play a role in school funding as well.
These charter schools get the majority of their per-student funding through the state’s general funds because they do not receive revenue for local taxes. And unlike district schools that get a portion of their per-student fund from property taxes. These amounts depend on the value of property around the school district. As an example, schools in areas with high property taxes get their funding from property taxes, and schools in areas with lower property value rely more on the general fund.
Options to Private STO Donations.
Private-school tax credit programs in Arizona consist of 4 separate tax credits. Donations made to qualifying school tuition organizations, 2 for individuals, and 2 for corporations. The Arizona Department of Revenue provides a list of qualified STOs for donations. The two tax credits for individuals are the Original Individual Credit and the Switcher Individual Credit. For corporations, there is the Corporate Credit and Disabled/Displaced Corporate Credit.
Know more about the Arizona tax credits and their benefits online and through articles posted by individuals.