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New Arizona Law Increases Tax Credit Amount for School Choice Program

Posted on Wednesday February 29, 2012

New law likely to increase donations to country’s oldest tax credit scholarship program

PHOENIX, AZ (February 29, 2012) –Governor Jan Brewer today signed legislation increasing the amount of maximum allowable donations to the state’s Individual School Tuition Organization Tax Credit Program, a move that is expected to increase access to the nation’s oldest scholarship tax credit program.

The legislation, which passed both the Senate and the House late last week, represents the first step in a move by advocates for educational options to expand and strengthen Arizona’s school choice programs via increased donation amounts, stronger accountability standards, and more comprehensive record-keeping procedures.

“Thanks to the hard work of legislators, advocates, and dedicated parents, today marks a significant step forward for Arizona families,” said Betsy DeVos, chairman of the American Federation for Children. “We applaud Arizona legislators and Governor Brewer for their actions, and look forward to continue working to strengthen school choice across the state.”

Individual donors can currently receive a dollar-for-dollar tax credit for contributions of up to $500 for single individuals and $1,000 for married couples to school tuition organizations that grant scholarships to Arizona families. The recently-passed legislation doubles the tax credit cap to $1,000 for individuals and $2,000 for joint filers.

The Arizona Individual School Tuition Organization Tax Credit Program is one of four publicly funded private school choice programs in Arizona, three of which are scholarship tax credit programs. Enacted in 1997, the individual school tuition organization tax credit program was the nation’s first-ever scholarship tax credit program. It currently serves more than 25,000 students at more than 900 schools this school year.

Nationwide, more than 210,000 students participate in 27 total publicly funded private school choice programs. The Individual School Tuition Organization Program, which has an extensive waiting list, is one of 10 scholarship tax credit programs nationwide serving nearly 130,000 students. Under the increased tax credit caps, priority will be given to students currently on the waiting lists and siblings of children already enrolled in the program.

A U.S. Supreme Court decision last spring upholding the constitutionality of the program paved the way for over $47 million in donations to school tuition organizations for the individual program last year.