ARIZONA STATE SENATE
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MOLLY GRAVER |
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LEGISLATIVE RESEARCH ANALYST FINANCE COMMITTEE Telephone: (602) 926-3171 |
RESEARCH STAFF
TO: MEMBERS OF THE SENATE
APPROPRIATIONS COMMITTEE
DATE: March 25, 2022
SUBJECT: Strike everything amendment to H.B. 2278, relating to student tuition organizations
Purpose
Repeals the individual Credit for Contributions to Certified Student Tuition Organizations (STOs) and modifies caps relating to remaining STO tax credits.
Background
An STO is a nonprofit organization exempt from federal taxation that allocates at least 90 percent of its revenue for educational scholarships or tuition grants to attend nongovernmental elementary or secondary schools. Subject to specified limitations, there are four credits a corporation, insurer or individual may receive against income tax liability for contributions made to an STO: 1) the corporate and insurer Credit for Contributions to STOs; 2) the corporate and insurer Credit for Contributions to STOs for Displaced or Disabled Students; 3) the individual Credit for Contributions to STOs; and 4) the individual Credit for Contributions to Certified STOs (A.R.S. §§ 43-1089; 43-1089.03; 43-1183; 43-1184; 43-1505; and 43-1603).
If the repeal of the individual Credit for Contributions to Certified STOs and the increase of certain STO tax credit caps results in a change to income tax revenues, there may be a fiscal impact to the state General Fund.
Provisions
1. Repeals the individual Credit for Contributions to Certified STOs.
2. Increases the cap on the individual Credit for Contributions to STOs from:
a) $500 to $1,243 in any taxable year for a single individual or head of household; and
b) $1,000 to $2,483 in any taxable year for a married couple filing jointly.
3. Directs the Arizona Department of Revenue to increase the cap on the individual Credit for Contributions to STOs for TY 2023 by:
a) $250 for a single individual or head of household; and
b) $500 for a married couple filing jointly.
4. Defers, until TY 2024, the annual inflation adjustment of the individual Credit for Contributions to STOs.
5. Increases, from $6 million to $8 million, the FYs 2022 and 2023 aggregate cap for the corporate Credit for Contributions to STOs for Displaced or Disabled Students.
6. Requires, beginning in FY 2024, the aggregate cap for the corporate Credit for Contributions to STOs for Displaced or Disabled Students to be annually increased by two percent.
7. Removes the following caps on an STO educational scholarship or tuition grant for a qualifying low-income student for the purposes of the corporate and insurer Credit for Contributions to STOs:
a) $5,600, for students in a qualifying preschool program, a kindergarten program or grades 1 through 8; and
b) $7,500, for students in grades 9 through 12.
8. Defines qualified examiner as a licensed physician, psychiatrist or psychologist.
9. Includes, in the definition of a qualified student for the purposes of the corporate Credit for Contributions to STOs for Displaced or Disabled Students, a child who is identified as having a disability by:
a) a public school system in another state; or
b) through an independent education evaluation by a qualified examiner.
10. Prohibits an STO, to be eligible for certification and retention of certification as a certified STO, from requiring a student or the student's family to provide a good or service that benefits the STO in exchange for awarding the student an educational scholarship or tuition grant.
11. Makes technical and conforming changes.
12. Becomes effective on the general effective date.