Corporate Champions

Arizona’s Tax Credit Programs

Your company can help Low-Income and Disabled/Displaced children at no cost through the Arizona Leadership Foundation

  • Under these programs (A.R.S. 43-1183), Class C Corporations, Insurance Carriers, S Corporations and certain LLC’s that owe Arizona corporate income tax or insurance premium taxes can redirect a portion, or their entire tax obligation to school tuition organizations (such as the Arizona Leadership Foundation.)
  • These school tuition organizations then award K-12 scholarships to students qualifying for the Low-Income or the Disabled/Displaced program.
  • Participating corporations redirect funds they must already pay to the state, enabling them to help Low-Income or Disabled/Displaced children achieve greater educational excellence at NO COST to the corporation.

As a result, the program is paving the way for an educated workforce that will greatly contribute to the betterment of our communities.

You can find out more about ALF here. If your company is interested in working with ALF, please contact us.

How It Works

APPLICATION SUBMISSION

The corporation contacts ALF and pledges a contribution amount. ALF completes the application and submits to AZ Department of Revenue (AZDOR).

APPROVAL

The AZDOR will review the application. Whether approved or not, ALF will contact the corporation within 20 days of application submission.

TIMELINE

Within 20 days of an approved application, the contribution must be submitted to ALF. ALF notifies AZDOR of receipt.

TAX CREDIT

Corporation takes the tax credit on their tax return or may carry forward any unused credit for up to five years.

Program Cap & Fund Designations for the 2023-2024 Fiscal Year

Low-Income Tax Credit Scholarship Program

$158,476,605

Disabled/Displaced Tax Credit Scholarship Program

$6 MILLION

Frequently Asked Questions

The program allows families who struggle financially or who have a Disabled/Displaced child, 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 seen the benefits of the program and believes it serves as a catalyst for a well-diversified workforce. As a result, Arizona has increased the cap from $5 million in 2007 to just over $158 million for Fiscal Year 2023/24.

Students apply to the Arizona Leadership Foundation for a scholarship to attend the private school of their choice. Our program awards scholarships based on three points: qualifying for financial need, prior academic achievement and extracurricular activities that build lifelong leadership skills. Scholarships are also available to disabled/displaced students. Scholarship funds are sent directly to the qualified private school on behalf of the student.

Under Chapter 301 of Arizona House Bill 2153, S-Corporation Owners or LLC’s that elect to file as S-Corporations, that owe Arizona corporate income tax can redirect a portion, or their entire tax obligation to the Arizona Leadership Foundation. We then award K-12 scholarships to students qualifying for the federal government’s free or reduced lunch program or the disabled/displaced program. The corporation’s owners, in turn, will receive a 100% tax credit for every dollar it donates. Participating corporations redirect funds they must already pay to the state, enabling them to help low-income children achieve greater educational excellence at NO COST to the corporation. As a result, the program is paving the way for an educated workforce that will greatly contribute to the betterment of our communities.

This program isn’t about which education system is superior. It is about empowering parents to have choices regardless of income and finding the place where every student learns best. Each child will thrive in a different educational environment (public, charter or private) but parents should have the ability to choose which one will be most effective for their student – this program helps ensure parents will have that choice. We would like to emphasize that your corporation is not taking a single cent away from public or charter education by contributing to the credit.

In July, the AZDOR takes 20 business days to approve applications. Once approved the corporation then has 20 days to send us their contribution via check or wire transfer. After the first round of applications in July, the AZDOR approves applications every Tuesday as long as money remains on the contribution cap for the current fiscal year.

If your company operates on a calendar year, ALF must receive your contribution before end of year, on December 31. If you are on a fiscal year and there is still money left on the contribution cap, you can make a contribution until the close of the fiscal year or until the contribution cap is met.

Corporations claim the credit by completing form 335 and attaching their approval notice provided by ALF and the AZDOR.*  Insurance carriers claim the credit by completing form E-TC within form E-TAX and attaching their approval notice provided by ALF and the AZDOR.*

Yes, any unused credit can carry forward for up to 5 years. *

For insurance companies claiming a premium tax credit, there is no minimum.  For S Corps/LLC’s there is a $5,000 minimum.  The minimum is an aggregate and can be met over the course of the year.

Yes, you are eligible to contribute several times throughout the year, as long as the AZDOR cap has not been meet.  ALF can provide updates on the status of the cap throughout the year to you, if you need that information for your business.

The company headquarters does not need to be domiciled in Arizona.  The company simply must have a premium tax or income tax liability in Arizona to be eligible for the redirection.

 July 1 to June 30

Arizona law states that a corporation may direct which schools receive their scholarship tax credits, but may not specify which students receive the scholarships.

The choice to be anonymous or have a public facing contribution is up to each individual company.  

Under Chapter 301 of Arizona House Bill 2153, S-Corporation Owners or LLC’s that elect to file as S-Corporations that owe Arizona corporate income tax can redirect a portion, or their entire tax obligation to the Arizona Leadership Foundation. We then award K-12 scholarships to students qualifying for the Low-Income or Disabled/Displaced program. The corporation’s owners, in turn, will receive a 100% tax credit for every dollar it donates. Participating corporations redirect funds they must already pay to the state, enabling them to help low-income children achieve greater educational excellence at NO COST to the corporation. As a result, the program is paving the way for an educated workforce that will greatly contribute to the betterment of our communities.

* This information does not constitute tax advice. Please consult with your tax professional.