Arizona Corporate Tax Credit Program
Your Corporation Can Help Low-Income Children at NO COST
Corporate Benefits of the Arizona Corporate Tax Credit Scholarship Program:
- Participating corporations receive a 100% tax credit for every dollar Donated.
- No cost – Participating corporations simply redirect funds they must already pay to the state.
- The program allows corporations to become our partner in providing educational opportunities that will positively enhance the lives of underprivileged children forever.
- Participating companies do not have to be domiciled in Arizona.
- They are only required to have tax liability with the state.
- These dollars can fund scholarships for children in a specific school or across the state. The Pappas Kids Schoolhouse Foundation provides scholarships to students attending private schools throughout Arizona.
Who Can Help These Students?
The following companies can take advantage of this state tax credit opportunity:
- Insurance Companies
- LLCs filing as a C-Corp or S-Corp
How Can Your Company Help These Students?
5 Easy Steps
- Identify your company’s corporate income tax liability and determine how much you would like to Donate versus pay to the state this fiscal year. (Your company can Donate the entire corporate tax liability amount).
- Contact the Pappas Kids Schoolhouse Foundation at firstname.lastname@example.org to start the process.
- Pappas Kids Schoolhouse Foundation will file a one-page form with the Department of Revenue asking for approval for the donation/credit. We will send you a copy of this form. The Department of Revenue will respond within 20 days on whether or not funds are available under the current fiscal year cap.
- Within 10 days of the Department of Revenue approval, your company must send a check or fund transfer to the Pappas Kids Schoolhouse Foundation for the contribution.
- When you file your company’s taxes, you will take the corporate income tax credit on the Standard 120 Form and file a 335 Form as well listing the credit amount.*
Please consult your tax adviser for advice on filing and using your credit.
Frequently Asked Questions
Why does Arizona allow this?
The program allows families struggling in a tough economy the opportunity to send their children to the school of their choice, no public monies are used, and the economy gets a boost from the additional economic activity. Arizona has also seen the benefits of the program and believes it serves as a catalyst for a well-diversified workforce. As a result, they have increased the cap from $5 million in 2007 to around $89 million for 2018.
What is the Statewide cap?
Each year, the State of Arizona limits the total amount of corporate state tax funding that can be used for distribution to private schools. The annual statewide cap for FY19 (2018 corporate taxes) is $89,161,006. Corporate tax credit applications are accepted by AZDOR until the statewide $89,161,006 tax credit maximum is met.
Where does the money go?
First students must qualify within 185% of the federally mandated free and/or reduced lunch program set annually in Washington D.C. Currently a family of four earning $75,000 would be eligible for the credit and one would add an additional $12,500 for each child in the family. Students then apply to the student tuition organization for the scholarship to attend the private school of their choice.
Private vs. Public vs. Charter
This program isn’t about which education system is superior. It is about giving parents a choice for their child’s education regardless of income. Each child will thrive in a different educational environment (public, charter or private). All parents should have the ability to choose which one will be most effective for their child. This program guarantees parents will have that choice. We would like to emphasize that your corporation is not taking any money away from public or charter education by contributing the credit
A school tuition organization cannot award, restrict or reserve scholarships solely on the basis of recommendation. A taxpayer may not claim a tax credit if the taxpayer agrees to swap donation with another taxpayer to benefit either taxpayer’s own dependent