Every fall, Tucson parish bulletins, school newsletters and church announcements start reminding people about the Arizona private school tuition tax credit. It is one of the more unusual tax rules in the country. An Arizona taxpayer can send part of their state income tax to a School Tuition Organization instead of the state, get it back as a dollar-for-dollar credit, and that money becomes scholarships for students at private schools.
Tucson has a particular stake in this program. Two of the state's larger STOs are based here: the Institute for Better Education on North Swan Road, and Arizona's Catholic Tuition Support Organization, which serves the Diocese of Tucson from its offices on South Stone Avenue. Here's how the credit works for tax year 2026.
The 2026 limits
There are two individual credits, and a donor has to fill the first before using the second. Figures are from the Arizona Department of Revenue.
- Original credit (Form 323): up to $787 for a single filer, married filing separately or head of household, and up to $1,570 for a married couple filing jointly.
- Switcher credit (Form 348): also called PLUS or overflow, up to $784 single and $1,561 married filing jointly, available only after giving the full original amount.
Together that's $1,571 for a single filer and $3,131 for a couple. The credit can't exceed your actual Arizona tax liability, so a retiree in Green Valley with little state tax owed can only redirect what they owe. ADOR has already published the 2027 limits, which rise slightly to $797 and $1,589 for the original credit.
The April 15 lookback
A gift made between January 1 and April 15, 2027 can be claimed on your 2026 return at the 2026 limits. That gives procrastinators a few extra months, and it lets you decide after seeing your tax situation. If you'd rather claim a January-to-April gift at the higher 2027 limit, it has to go on your 2027 return.
Where the money goes
The program is large. In fiscal 2025, ADOR counted $233.3 million donated across individual and corporate credits, and 44,815 students awarded scholarships. That student count may include some duplicates, because students can receive awards from more than one STO. STOs paid scholarships to 350 private schools that year.
Tucson schools draw heavily on it. Salpointe Catholic High School received 918 original-credit scholarships in fiscal 2025, more than any other school in Arizona. Pusch Ridge Christian Academy received $1.9 million in original-credit money. CTSO has distributed more than 55,000 scholarships since 1999 and reports $211.1 million donated through fiscal 2025. IBE reports $310.4 million cumulative, and in our matching it lists more Pima County schools than any other STO. Our guide to STO scholarships in Tucson shows which organizations list which local schools.
Can I help a specific student?
This is the most common question, and the answer needs care. You can recommend a student or a school when you give, and many STOs let donors name a school. But an STO can't award scholarships solely on the basis of a donor's recommendation, and Arizona law prohibits swapping donations so that two families each benefit the other's children. Think of a gift as support for a school community, not a guaranteed payment for one child.
A note for ESA families
Many Tucson families now have an Empowerment Scholarship Account, and it changes how STO aid works for them. Under the ESA contract, a parent agrees not to accept an STO scholarship for that child in the same year. Giving to an STO is fine. Any taxpayer can give, including ESA parents. The limit applies to receiving an award.
STOs handle this differently. IBE tells families that STO money can't be used while an ESA contract is active, even if no ESA money has been spent, and that switching mid-year requires cancelling the ESA first. Different funding sources may be used in separate quarters. ACSTO says it can still award scholarships to ESA students but holds them as multi-year scholarships for after the ESA ends. If a relative's gift names your child and your child is on an ESA, ask the STO how it will treat that award. Our ESA versus STO calculator can help you decide which path fits each child.
Corporate credits, briefly
Businesses have their own credits. The low-income corporate credit has a statewide cap of $110 million a year on ADOR's current page, and the disabled/displaced credit is capped at $6 million. Corporate gifts need ADOR preapproval. IBE lists December 31 as the last day to fund a preapproved corporate gift. If you own a Tucson business, ask your accountant whether a corporate gift makes sense alongside your personal one.
How to give
- Choose an STO. Tucson Catholic families usually give to CTSO. Families at Christian schools often give to ACSTO or IBE. Multi-school STOs such as IBE and APSTO serve a broad mix of schools.
- Give online through the STO's site and keep the receipt it sends.
- Claim the credit on Form 323, and Form 348 if you used the switcher credit, with your Arizona return.
For more on how CTSO fits with other aid at Catholic schools, see our guide to paying for Catholic school in the Diocese of Tucson.
Sources
- Arizona Department of Revenue: Credits for Contributions to Certified School Tuition Organizations
- ADOR Private School Tuition Organization Credit Report, FY2025
- Arizona's Catholic Tuition Support Organization (CTSO)
- Institute for Better Education
- IBE: ESA and STO scholarships
- A.R.S. 15-2402: ESA contract terms