Taxpayers receive a dollar-for-dollar reduction on their taxes for up to $750 donated to a school tuition organization.
Arizona is expanding its private school tuition tax creditsonly a day after the U.S. Supreme Court found the program legal, The Arizona Republic reports. In a bill passed by a 27-1 vote, the state Senate has increased donation limits from $500 to $750. The bill also removes donation limits for corporations and insurance companies.
The tax credits allow Arizona taxpayers to divert their income to school tuition organizations and get a dollar-for-dollar reduction on their taxes. According to The Republic, state residents moved $51 million in such a way in 2009. According to the Arizona Department of Revenue, the limit increases will have an impact on the state income tax and state, county and local severance tax collections, reducing them by $25 million and $29 million respectively.
Supporters of the program say it is a money-saving measure for the fiscally crippled state, because it saves the school system $5,200 for every student that transfers out of a public school.
A fiscal analysis of the bill noted that the state would break even from the proposed changes if about 3,300 students transferred to private schools in 2012.
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