Individual Tax Credit

Impact on Students: STOs provide scholarships to students attending private Chrisitan schools enabling them to attend private schools that might otherwise be unaffordable.

Dual Benefit: Donations to STOs offer a win-win situation: donors receive a tax credit, and students receive educational opportunities. 

Easy Process: Donating to an STO is simple and can be done through various methods, including online, mail, or phone. 

Employer Matching: Many companies offer to match employee donations to charitable organizations, including STOs. 

Deadline: While you can donate any time of year, donations made between January 1st and April 15th can be designated to apply to either the previous or current tax year. 

Supporting School Choice: Donating to an STO supports the principle of school choice, allowing parents to choose the educational environment that best suits their child’s needs.

Beyond Tax Liability: Donors can give beyond their tax liability, and these additional donations may be deductible on their federal tax returns as well as available for future use within the next 5 tax years.

Transparency and Accountability: STOs are certified by the Arizona Department of Revenue (ADOR) and must meet strict requirements, ensuring transparency and accountability in how donations are used.

Student Designation: Donors can recommend students but it is never a guarantee that the student specified will receive the full amount donated.

Consult a Professional: Donors should consult with a tax advisor or CPA to understand the full tax implications of their donation

Corporate Tax Credit:

1. Zero net cost to the business

• Redirect, don’t donate: Corporations can redirect up to 100% of their Arizona corporate income or insurance premium tax liability to a qualified STO, receiving a dollar-for-dollar tax credit.
• No extra funds required: This is not a new expenditure, but rather a redirection of taxes already owed to the state, effectively costing the corporation nothing extra. 

1.  Impact on Arizona’s students and schools

• Scholarship funding: Corporate donations directly fund scholarships for students, particularly those from low-income families, disabled, or displaced students, attending K-12 private schools in Arizona.
• Increased educational opportunities: The program allows families who may not otherwise be able to afford private school tuition to provide their children with a quality education of their choice.
• Supports school choice: By participating, corporations actively support educational choice and empower families to select the best learning environment for their children. 

3. Benefits for the business

• Corporate social responsibility: Participating in the program demonstrates a company’s commitment to the local community and can enhance its social responsibility profile.
• Potential public relations benefits: Companies can choose to be publicly recognized for their contributions and their positive impact on education.
• Carryforward of unused credits: Any unused tax credit amounts may be carried forward for up to 5 years.
• Potential federal tax deduction: Depending on the business’s tax situation, the donation might also qualify for a federal income tax deduction as STOs are 501(c)(3) nonprofit organizations. 

4. Program details and process

• Minimum and maximums: S-corporations and LLCs filing as S-corps have a minimum donation of $5,000, while C-corporations and insurance companies have no minimum.
• Eligible Corporations:  Corporate STO credits are available only to corporate taxpayers, exempt organizations with unrelated business income, corporate partners of a partnership (if passed through by a partnership), or an S corporation (may be passed through to their individual shareholders).
• Annual statewide cap: The annual statewide cap for corporate donations to the STO program, allocated on a first-come, first-served basis, opens in July.
• Pre-approval required: Companies need to contact an STO to apply for pre-approval of their donation request from the Arizona Department of Revenue (ADOR).
• School recommendations allowed: While corporations cannot designate a specific student, they can recommend a specific school or multiple schools to benefit from their contribution. 

5. Easy to participate

• Contact an STO: Companies interested in participating can easily connect with an STO like Arizona Christian Tuition to get started.

STO assistance: STOs provide support and guidance throughout the process, from application to receiving the tax credit.