Recent federal legislation passed by the 119th Congress—commonly referred to as the One Big Beautiful Bill Act—clarifies that donations made to School Tuition Organizations in Arizona, such as Community Reinvestment: Low Income Based Scholarships Inc., may now be claimed both as a full state tax credit and as a federal tax deduction.
This means that individuals and businesses donating to Community Reinvestment: Low Income Based Scholarships Inc. can reduce their Arizona income tax liability dollar-for-dollar and also deduct the donation from their federal taxable income, assuming they itemize deductions. The net result is that many donors will experience no out-of-pocket cost for contributing—while still supporting students in financial need.
Arizona’s tuition tax credit program has been in place since 1997, allowing taxpayers to direct their liability toward private school scholarships rather than paying the state directly. In the most recent years, a majority of scholarships awarded through these programs have gone to students from families at or below 185% of the federal poverty line. Many recipients also come from foster care or other high-need backgrounds.
Community Reinvestment: Low Income Based Scholarships Inc. operates under Arizona’s low-income and foster care provisions and uses donations to fund tuition scholarships for K–12 students across the state. These scholarships make private education accessible to families who would not otherwise have the means, while helping reduce overall state expenditures—since public education costs the state more per student than these scholarships do.
The recent federal clarification addresses prior uncertainty around whether donations that generate a state tax credit could also be deducted federally. Under the current guidance, and as applied through this law, these donations now offer both benefits, making the financial mechanics of giving far more favorable for many taxpayers.
Donations to Community Reinvestment: Low Income Based Scholarships Inc. can be made anytime throughout the year, and credit-eligible contributions made by April 15 can be applied to the prior tax year in Arizona. Instructions and forms are available at lowincomebasedscholarships.com.
For those looking to support educational access without incurring additional cost, this tax structure makes contributing a straightforward and financially efficient option.
