Arizona House Republicans advance federal tax credit bill for school scholarships

Republicans in the Arizona House gave preliminary approval to a bill Wednesday that would opt Arizona into a federal tax credit for school scholarships.

The bill, SB1142, would allow taxpayers to claim a federal tax credit up to $1,700 for contributions to K-12 scholarship-granting organizations starting in 2027.

Supporters of the bill, like Rep. Cody Reim, said the credit allows taxpayers more freedom to choose where their money goes.

“If the state of Arizona does not elect to participate in this federal tax credit, then we are essentially funding schools in other states with federal tax money that is being implemented on the taxpayers of Arizona,” Reim said.

Opponents at the Legislature, like House Minority Leader Oscar De Los Santos, said there are not enough accountability safeguards for the credit. He compared it to issues facing the state’s private school voucher program.

“The ESA voucher program is riddled with waste, fraud and abuse, dollars spent on diamond rings and lingerie and all sorts of things, and Senate Bill 1142 will only further entrench that system,” De Los Santos said.

The bill requires the Arizona Department of Revenue to submit a list of eligible scholarship-granting organizations at the beginning of every year to the U.S. Department of the Treasury, and to display that list on the Revenue Department’s website.

Arizona would be the 28th state to opt in to the credit.

Republican state lawmakers advanced the bill on party lines, arguing it gives taxpayers more freedom over their money.