Federal Scholarship Tax Credit

We are thrilled to announce that a new opportunity now exists to support Private Education in Arizona! At School Choice Arizona, we believe the Federal Scholarship Tax Credit (FSTC) reflects our existing vision to see every family afford the education their student deserves.

Overview

Starting January 1, 2027, eligible taxpayers can claim a dollar-for-dollar federal tax credit of up to $1,700 for individuals and $3,400 for married couples filing jointly, for donations to approved K–12 scholarship granting organizations (SGOs), like ACSTO.

Individuals in any state may donate and claim the federal tax credit. However, scholarship organizations may only use tax credit contributions to support students in states that have officially opted in.

Donor Guide

If you have donated your state tax credit to School Choice Arizona in the past, you will be no stranger to the Federal Scholarship Tax Credit (FSTC) process. Here’s how it works:

1) Make a donation to School Choice Arizona. Individuals can claim up to $1,700 and married couples filing jointly can claim up to $3,400. You may donate up to these amounts OR your federal tax liability, whichever is less. By law, married couples filing jointly must make two $1,700 donations (thereby receiving two receipts) to claim their $3,400 donation as a dollar-for-dollar tax credit. All donations must be made in the calendar year you plan to claim the federal tax credit.

2) School Choice Arizona will provide a scholarship to a student at the Private School you identified with your donation. You are not required to identify a school. By law, 90% of FSTC contributions must be used to fund scholarships.

3) Claim your School Choice Arizona donation when you file your federal taxes. You will receive a federal dollar-for-dollar tax credit on your donation. This means that if you usually receive a federal refund, your refund will be bigger! If you usually owe, you will owe less.

Key Takeaways for Donors:

-The Federal Scholarship Tax Credit will apply to qualifying contributions beginning January 1, 2027.

-Individuals are eligible to claim a dollar-for-dollar federal tax credit of up to $1,700.

-Married couples filing jointly are eligible to claim a dollar-for-dollar federal tax credit of up to $3,400.

-Married couples filing jointly must make two donations of $1,700 to claim the $3,400 maximum.

-Donors may identify a school with their Federal Scholarship Tax Credit donation. By law, student recommendations are not allowed.

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Parent Guide

While the Federal Scholarship Tax Credit has the power to serve students at any school (public, private, or homeschool), School Choice Arizona will continue to serve students at our Private Schools with the Federal Scholarship Tax Credit donations we receive.

Scholarships School Choice Arizona awards, from FSTC donations can be used for tuition, tutoring, special need services, uniforms, and after-school programs.

Families earning up to 300% of the Area Median Gross Income (AMGI) will be eligible to use Federal Tax Credit Scholarships.

School Choice Arizona applications will be available July 2027.

Frequently Asked Questions

  • Any individual with a federal tax liability.

  • By law, individuals can receive a dollar-for-dollar tax credit on their 2027 federal taxes for donations made to School Choice Arizona between January 1, 2027 and December 31, 2027.

  • No. An individual can make a donation to School Choice Arizona and claim the donation on their Arizona state taxes (up to the annual maximum or their state tax liability, whichever is less). The individual can then make a second donation to School Choice Arizona and claim the donation on their federal taxes (up to $1,700 for individuals and $3,400 for married couples). The same donation cannot be claimed on both the taxpayer’s state and federal taxes.

  • No, stock gifts are not eligible for federal tax credits.

  • School Choice Arizona’s selection committee will determine the amount eligible students receive.