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 just over $142 million for Fiscal Year 2022/23.
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.
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 must have the ability to choose which one will be most effective for their son or daughter. This program guarantees 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 the credit.
Arizona law states that a corporation may direct which schools receive their scholarship tax credits but may not specify which students receive the scholarships.
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.
For example, if Jill owns 60% of The Hill, Inc. (an S-Corporation) and Jack owns 40% and The Hill, Inc. donates $1M to ALF, Jill would receive a $600K dollar-for-dollar tax credit on her personal AZ income taxes and Jack would receive a $400K dollar-for-dollar tax credit on his personal AZ taxes. Also, if your company is an LLC, but taxed as an S-Corporation and files forms 1120S and 120S each year, you would be eligible for this.
