SCHOOL TAX CREDITS
This publication provides general information about Credit for Contributions Made or Fees Paid
school tax credits for individuals. For complete details, to a Public School
refer to the Arizona Revised Statutes. In case of
inconsistency or omission in this publication, the What do I have to do to qualify for this credit?
language of the Arizona Revised Statutes will prevail. To qualify for the credit you must make cash or payroll
withholding contributions or pay fees to a public school
What school tax credits are available to individuals? for support of extra curricular activities or for character
An individual may claim a credit for making education programs.
contributions or paying fees to a public school for
support of extra curricular activities or character Will I qualify for the credit if I pay fees for my own
education programs. An individual may also claim a child to participate in an extra curricular activity or
credit for making a donation to a qualified school tuition character education program?
organization for scholarships to private schools. Yes, if the fees you pay for your own child to participate
in an extra curricular activity or character education
Who may claim the individual school tax credits? program qualify for the credit.
The individual school tax credits are available only to
individuals. Partnerships and S corporations cannot pass Do contributions I make to the school qualify for the
these credits through to their partners or shareholders. credit?
These credits are also not available to trusts, estates, Yes, if the contributions are in support of extra
regular corporations, or S corporations. curricular activities or a character education program.
What form does an individual use to claim these Must the credit for contributions made or fees paid
credits? to a public school be claimed in the year of donation?
An individual that makes contributions or pays fees to a Yes.
public school for support of extra curricular activities or What is the maximum dollar amount of the credit?
character education programs would use Arizona Form The credit is equal to the amount contributed or the
322 to claim this credit. An individual that makes a amount of fees paid. However, for single taxpayers or
contribution to a qualifying school tuition organization heads of household, the credit cannot exceed $200. For
would use Arizona Form 323 to claim this credit. married taxpayers that file a joint return, the credit
Can a taxpayer receive a refund of these credits? cannot exceed $400. If married taxpayers file separate
No. The credits may only be used to the extent they returns, each spouse may claim 1/2 of the credit that
reduce a tax liability to zero. Any unused amounts may would have been allowed on a joint return.
be carried forward for not more than five consecutive What is a character education program?
taxable years. A character education program is a program defined in
Can a taxpayer claim both credits in the same A.R.S. § 15-719. Under this statute each district may
taxable year? develop its own course of study for each grade. At a
Yes. minimum, the character education program must include
instruction in the definition and application of at least
On the Arizona state income tax return, can a six of the following character traits: truthfulness,
taxpayer claim both an itemized deduction and a tax responsibility, compassion, diligence, sincerity,
credit for a contribution made to either a public trustworthiness, respect, attentiveness, obedience,
school or a school tuition organization? orderliness, forgiveness and virtue.
No. Any amount claimed as a tax credit cannot be taken
as an itemized deduction. However, you may still claim What public schools and grades are eligible for the
any excess over the amount claimed as a credit as an credit?
itemized deduction as long as the contribution did not Public schools and charter schools that provide
benefit your dependent. instruction in grades kindergarten through 12 are
eligible for the credit. Nongovernmental schools, pre-
Must a taxpayer have a child in school in order to schools, community colleges, and universities do not
claim one or both of these credits? qualify for the credit.
What is a fee paid for the support of extra curricular
Is a charter school considered to be a public school activities?
or a private school? A fee is a dollar amount paid to a public school for the
A charter school is defined in A.R.S. § 15-101 as a public support of extracurricular activities. It is important to
school. Therefore, a charter school is eligible for the credit note that at least some monetary amount must be levied
for contributions made or fees paid to a public school to to participate in an extracurricular activity in order for
support extracurricular activities or character education. the credit to be available.
Arizona Department of Revenue Pub 707 Revised December 2011 Page 1
SCHOOL TAX CREDITS
What are extracurricular activities? Completed forms can be faxed to 602-716-7991 or
Extracurricular activities are school sponsored activities mailed to:
that require enrolled students to pay a fee in order to Arizona Department of Revenue
participate. Such activities may include, but are not Office of Economic Research and Analysis
limited to, use of band uniforms, use of equipment or 1600 West Monroe, Phoenix Arizona 85007
uniforms for varsity athletics, use of scientific
Must a public school issue a receipt to the taxpayer
laboratory equipment or materials, or in-state or out-of-
for contributions or payment of extracurricular
state trips that are solely for competitive events.
Extracurricular activities do not include any senior trips
Yes. The receipt should include the public school name,
or events that are recreational, amusement or tourist
school district number, taxpayer name, amount paid,
activities. Generally, any educational or recreational
date paid, and a description of the activity being
activities that supplement the educational program of
the school are considered to be extracurricular activities.
A.R.S. § 15-342.24 requires each district school board May I make credit eligible contributions through
to determine which activities are extracurricular and payroll withholding?
what fees will be levied. Yes. You may now be able to make credit eligible
contributions to a public school through payroll
What is an enrolled student?
withholding. Check with your employer to see if your
An enrolled student is a student included by the school
employer has agreed to withhold contributions that
in its average daily membership count (ADM). Pre-
qualify for this credit from your pay.
school students, except handicapped students, and adult
education students should not be included. Can a public school use unencumbered contributions
for short-term capital items?
If a school establishes a central fund to pay for
Yes. A school may temporarily use up to 50% of the
extracurricular activities, would a payment to this
unencumbered contributions it received before tax year
central fund qualify for the tax credit?
2011 for short-term capital items such as technology,
Yes. The credit is authorized for any fees paid by a
textbooks, library resources, instructional aids, pupil
taxpayer to a public school located in this state for the
transportation vehicles, furniture and equipment in FY
support of extracurricular activities.
2011-12 and 2012-13. A public school that uses
Where should the central fund be held? unencumbered contributions for the short-term capital
The central fund should be held at the school district, items must submit a report to the Joint Legislative
but the district must separately account for the funds Budget Committee at the end of the fiscal year.
from each public school and not transfer funds from one
public school to another. Private School Tuition Credit
Can a taxpayer make a contribution or pay fees to What do I have to do to qualify for this credit?
an organization (e.g., PTA, school foundation, school To qualify for this credit, you must make cash or payroll
district or school club) which then gives the funds in withholding contributions to a tuition organization that
a lump sum to the school or directly pays for provides scholarships or grants to qualified schools.
extracurricular activities or character education? What is the maximum dollar amount of the credit?
No. A.R.S. § 43-1089.01 requires that the fees be paid The credit is equal to the amount contributed. However,
“to a public school.” Therefore, the payment must be for single taxpayers or heads of household, the credit
made directly to the public school or district only. cannot exceed $500. For married taxpayers that file a
Must each public school make a report to the joint return, the credit cannot exceed $1,000. For tax
Department of Revenue detailing amounts and uses year 2012, those amounts increase to $503 and $1,006,
of the extracurricular activity and character respectively. If married taxpayers file separate returns,
education program funds? each spouse may claim only 1/2 of the credit that would
Yes. Each school must report on a form prescribed by have been allowed on the joint return.
the department by February 28 of the following What is a school tuition organization?
calendar year showing the number of payments, the A school tuition organization is one that is tax exempt
dollar amount of fee and contributions received and the under Section 501(c)(3) of the Internal Revenue Code,
amount spent categorized by specific extracurricular allocates at least 90 percent of its annual revenue to
activity or character education program. scholarships or grants, and makes its scholarships/grants
available to students of more than one qualified school.
Arizona Department of Revenue Pub 707 Revised December 2011 Page 2
SCHOOL TAX CREDITS
Will the Department of Revenue certify school Must the private school tuition tax credit be claimed
tuition organizations? in the year of donation?
Yes. Beginning January 1, 2011, the Arizona No, beginning in 2011, credit eligible contributions
Department of Revenue is required to begin certifying made to a school tuition organization from January 1,
school tuition organizations. The Arizona Department 2011 to April 15, 2011 may be used as a tax credit on
of Revenue will maintain a registry of currently either your 1) 2010 or 2) 2011 Arizona income tax
certified school tuition organizations on its website, return.
What is a qualified school?
A qualified school is a non-governmental preschool for For Additional Information, call:
handicapped students, or a non-governmental primary Phoenix .............................................. (602) 255-3381
or secondary school located in Arizona. The school Toll free from area codes 520 & 928 (800) 352-4090
cannot discriminate on the basis of race, color, For Hearing Impaired - TDD only:
handicap, familial status, or national origin. The Phoenix .............................................. (602) 542-4021
primary school begins with kindergarten, and the Toll free from area codes 520 & 928 (800) 397-0256
secondary school ends with grade 12.
Are there situations where a contribution to a school Or Write to:
tuition organization, as defined in statute, would not Arizona Department of Revenue
qualify for the tax credit? Taxpayer Information & Assistance
Yes. Your donation to the school tuition organization 1600 W Monroe
will not qualify for the credit if you designate the Phoenix AZ 85007
donation for the direct benefit of your dependent. Internet Address ....................... www.azdor.gov
Additionally, your donation will also not qualify if you
This publication is available in an alternative format upon request.
designate a student beneficiary as a condition of your
contribution to the school tuition organization.
Additionally, the tax credit is not allowed if you agree
with another person to designate each other’s
contribution to the school tuition organization for the
direct benefit of each other’s dependent, a practice
commonly known as swapping.
May I make credit eligible contributions through
Yes. You may now be able to make credit eligible
contributions to a school tuition organization through
payroll withholding. Check with your employer to see
if your employer has agreed to withhold contributions
that qualify for this credit from your pay.
Arizona Department of Revenue Pub 707 Revised December 2011 Page 3