ARIZONA HOUSE OF REPRESENTATIVES Fifty-fifth Legislature First Regular Session
	Senate: ED DP 6-4-0-0 | 3rd Read 16-14-0-0

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SB 1041: STOs; aggregate cap increase

Sponsor:  Senator Livingston, LD 22

Committee on Ways & Means

Overview

Increases, beginning in FY 2022, the maximum amount of tax credits that the Department of Revenue (DOR) may disburse, in the aggregate, — for cash contributions made by the taxpayer to a school tuition organization for displaced or disabled students (STO) — in a fiscal year.

History

An STO is defined in statute as a nonprofit established to receive contributions from taxpayers and to disburse educational scholarships or tuition grants to allow qualifying students to attend any qualified school of their parents' choice. An STO must allocate at least 90 percent of its annual revenue from taxpayer contributions for educational scholarships or tuition grants. (A.R.S. § 43-1603) To qualify for an STO scholarship, a student must: 1) have been placed in foster care at any time before graduating from high school or obtaining a general equivalency diploma; 2) have a disability as defined under federal law; 3) have attended a governmental school that offers services to students with disabilities; or 4) be the dependent of a member of the military who is stationed in Arizona (A.R.S. § 43-1505, 43-1603).

Under current law, corporations and insurers may claim a tax credit for voluntary cash contributions made to an STO. The amount of the credit is the total amount of the taxpayer's contributions for the taxable year. DOR may not disburse more than $5,000,000 in STO tax credits in any fiscal year. STO tax credits are disbursed on a first-come, first-served basis. (A.R.S. § 43-1184, 20-224.07)

Provisions

1. Increases the maximum amount of tax credits that DOR may disburse, in the aggregate, — for cash contributions made by the taxpayer to an STO — in a fiscal year; the tax credit cap is raised as follows:

a) For FY 2022, to $10,000,000;

b) For FY 2023, to $15,000,000; and

c) For FY 2024 and each fiscal year thereafter, to $20,000,000.  (Sec. 1)

2. Contains technical changes. (Sec. 1)

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                        SB 1041

Initials VP/NM Page 0 Ways & Means

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