by Kimmie Dillon | Apr 13, 2026 | Opinion
By Kimmie Dillon & Sarah Hitchcock |
Arizona is known as the national gold standard for education opportunity. With a decades long history of tax credit scholarships supporting families and the nation’s first education savings account (ESA) program, Arizona paved the way for other states to make bold education reforms. Senate Bill 1142, now on the governor’s desk, is the next iteration of such reforms.
Arizona faces a choice: opt in to the federal education freedom tax credit (EFTC)—or lose big. Created by the Working Families Tax Cut Act, taxpayers can claim up to $1,700 in dollar-for-dollar federal tax credits for contributions to nonprofit Scholarship Granting Organizations, referred to as school tuition organizations (STOs) in Arizona. From there, STOs provide scholarships for numerous educational resources—including tuition, tutoring, and special education services—all designed to prioritize students.
And at what cost to state budgets? Absolutely none.
Simply put, these private donations will have a tremendous impact for Arizona families. If Arizona rejects this opportunity, 177,000 scholarships may be lost over the next three years alone. That’s 177,000 kids who won’t receive the educational support they need. Access to the EFTC ensures that Arizona parents can continue tailoring education to the unique needs of each child.
Importantly, Arizona taxpayers can donate to STOs regardless of their state’s opt in status. But states that decline to participate will effectively require residents to send donations across state-lines, instead of using funds to educate children in their home state.
Arizona is positioned to immediately and uniquely benefit from the EFTC because of its mature network of STOs. These non-profits are well-established—ready to immediately process charitable donations without the ramp up period that may hinder less-prepared states. Where other states may spend the early years building up organizational capacity of the nonprofit sector, Arizona can spend them distributing scholarships.
EFTC scholarships will be another avenue to fund the freedom for families who seek educational instruction alternatives. Denying families this simple yet effective tool will only hinder their ability to do what they need to for their child’s success. Research shows that choice benefits not only participating families, but traditional public school systems, too. A peer-reviewed study examined all 50 states and Washington, D.C., measuring access to private, charter, homeschool, and public school options. The findings were clear: states with higher levels of educational freedom consistently demonstrated higher student achievement.
One of the biggest reasons families chose to privately educate their children is that they desire instruction aligned with their values; one school cannot meet the needs of all students. By providing an array of opportunities, families are free to choose what’s best for their child. Arizona now has an opportunity to provide an additional $983 million in funding over the next three years.
Momentum is growing across the country with nearly 30 states opting in to the credit. A bipartisan coalition of governors and state legislators have embraced educational freedom, and now our state can supercharge education freedom for students and families.
Opt in or lose big, Arizona.
Kimmie Dillon serves as executive director of the America First Policy Institute’s Arizona state chapter. Sarah Hitchcock serves as director of the Education Freedom campaign at the America First Policy Institute.
by Staff Reporter | Apr 12, 2026 | Education, News
By Staff Reporter |
The Arizona superintendent of schools is urging Gov. Katie Hobbs to lift a financial burden for schools.
Hobbs has yet to decide on a bill, SB 1142, allowing Arizona schools to participate in a new federal school tax credit opportunity. Superintendent Tom Horne says the governor needs to sign the bill, or else Arizona schools will lose out on critical funding.
The pending legislation wouldn’t come at a cost to the state, and it could potentially provide up to $6 billion more to public, charter, and private schools.
“Any school could establish such a scholarship organization to accept contributions and bring more money to the classroom,” said Horne. “It does not cost the state any money and would increase funding for education.”
Horne mentioned that another prominent Democratic governor has backed this federal program.
“This bill benefits students in public district schools, charters, and every other school setting,” said Horne. “[Gov. Hobbs] should join fellow Democrat Governor Jared Polis of Colorado in supporting this program.”
Unlike Hobbs, the Colorado governor has expressed support for school choice. One other Democratic governor, Josh Stein of North Carolina, has opted into the program.
The Democratic governors of Kansas, Kentucky, North Carolina, and Wisconsin all vetoed opting into the program.
Gov. Hobbs vetoed similar legislation back in January (SB 1106/HB 2153).
State Sen. Shawnna Bolick (R-LD2) sponsored the bill. It passed both chambers without support from any Democratic lawmakers, and was sent to Gov. Hobbs on Wednesday.
Arizona House Democratic lawmakers said they opposed SB 1142 because it doesn’t establish enough oversight of the distribution of funds. Some characterized it as a wrongful diversion of public funds from public schools, insisting it would ultimately impact the state general fund. However, this program derives its funds from a federal tax credit.
Last year, Congress included the federal school tax credit program within the FY2025 reconciliation act (the “One Big Beautiful Bill Act”). The program launches January 1, 2027.
The federal legislation allows taxpayers to donate up to $1,700 annually to state-recognized Scholarship Granting Organizations (SGOs) that issue grants to cover eligible school expenses for certain students like books, supplies, tutoring, special needs services, computers, internet access, tuition, fees, room and board, uniforms, and transportation.
With that donation potential, Arizona schools could see up to $6 billion in extra funding. (The Arizona Department of Revenue reported over 3.5 million individual income tax returns in 2023).
Only students whose family income falls below 300 percent of their area median income would qualify for SGO grants.
The federal legislation requires SGOs to be 501(c)(3) nonprofits, provide scholarships to 10 or more students who don’t attend the same school, spend at least 90 percent of revenue on qualifying scholarships, and prioritize scholarships first for students who have received scholarships in previous years and then for siblings of such students.
Should Gov. Hobbs approve Arizona’s participation in the program, the Arizona Department of Revenue would administer the federal SGO credit and approve SGOs.
ADOR would submit a list of certified SGOs to the Secretary of the Treasury annually and post the list on the ADOR website.
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by AZ Free Enterprise Club | Jan 25, 2025 | Opinion
By the Arizona Free Enterprise Club |
As President Trump gets to work cleaning up Joe Biden’s failed economy, the last thing the people of Arizona need is to be sending their hard-earned dollars to woke Hollywood. But that’s exactly what’s happening.
Thanks to a law passed in 2022, movie companies that film in Arizona will begin receiving refundable tax credit subsidies this year—up to 15 percent if they spend up to $10 million in production costs, 17.5 percent if they spend between $10 million and $35 million, and 20 percent if they spend over $35 million. Then, to top it all off, these movie companies can get an additional 2.5 percent if they meet other criteria.
But here’s the real kicker. The keyword in all of this is “refundable.” This essentially means that if a movie company qualifies for more credits than they owe in taxes, the State of Arizona sends them a check!
So, how much does this outrageous tax scheme cost the people of Arizona?
Up to $125 million each year!
For that kind of money, there must be at least some kind of return on this investment, right? Nope.
If a company comes to Arizona, films a movie, mentions our state in the credits but decides not to release or distribute the film, it still receives the money.
Yes. You read that right. Arizona taxpayers could be funding Hollywood movies that won’t ever see the light of day…
>>> CONTINUE READING >>>
by Matthew Holloway | Sep 26, 2024 | News
By Matthew Holloway |
Republican Congressman David Schweikert, working alongside Reps. Mike Kelly (R-PA), Glenn Grothman (R-WI), and Jared Golden (D-ME) introduced the Employee Retention Tax Credit Repeal Act on Tuesday. The bipartisan legislation is designed to streamline lower-risk returns from small businesses for more rapid processing by prohibiting the IRS from processing COVID-19 Employee Retention Tax Credit (ERTC) claims filed after January 31, 2024. The bill also drastically increases the penalties on businesses and individuals defrauding the government.
According to a press release from Schweikert’s office, the ERTC was initially created to enable “Main Street” businesses to keep furloughed staff employed during the COVID-19 pandemic. “However, legitimate returns from small businesses desperately needing support were crowded out by perverse promoters looking to take advantage of an emergency program, landing ERTC on the IRS’s ‘Dirty Dozen’ list in 2023.”
In a July statement, IRS Commissioner Danny Werfel warned that the law, as written, presented “more and more questionable claims,” noting that, “The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining.” The Congressman’s office noted that Werfel asked for Congress to help with this situation and to assist the U.S. Department of the Treasury to “address fraud and error.”
“The ERTC Repeal Act would enable the return to fiscal sanity and end a program riddled with fraud that could cost up to seven times more—up to $550 billion—than initially estimated if allowed to continue. By eliminating the ERTC program, this bill would save taxpayers an estimated $79 billion over ten years. “
Schweikert explained, “We’ve all heard from the number of small businesses in our district waiting for their claims to be processed. A 1.4 million return backlog still exists, and moving the deadline up, rather than waiting until April 2025, will enable the IRS to go after the bad actors seeking to take advantage of taxpayers while approving legitimate claims faster and delivering long-overdue refunds to small businesses. Congress would be perpetuating a moral hazard if this level of fraud were allowed to go unpunished. It’s past time fiscal responsibility prevails, and we act on behalf of future generations who will be shouldered with a more than $35 trillion national debt.”
Per the release, the ERTC Repeal Act would advance the sunset date of the original program, and in addition to prohibiting processing of claims submitted after January 31, 2024, it would:
- Increase penalties for promoters from $1,000 to $10,000 for individuals and $200,000 for business promoters;
- Impose a $1,000 penalty for failure to comply with due diligence requirements; and
- Extend the statute of limitations period on assessments to six years.
According to the text of the bill, any businesses promoting the ERTC may also be subject to “75 percent of the gross income derived (or to be derived) by such promoter with respect to the aid, assistance, or advice.”
A corresponding Senate Measure spearheaded by Senators Tom Tillis (R-NC), Mitt Romney (R-UT), and Joe Manchin (D-WV) was announced September 18th.
“Repealing the ERTC is a critical step towards addressing America’s debt crisis,” Tillis said in a statement. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”
According to the Senate findings, the ERTC added approximately $230 billion to the U.S. deficit through Fiscal Year 2023 and was projected to ballon to as much as $550 billion. The IRS also announced in June that between 10% and 20% of claims showed “clear signs of being erroneous” while another 60% to 70% showed an “unacceptable risk” of being improper.
Under existing law, the credit will persist until April 25, 2025.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Corinne Murdock | Nov 3, 2023 | News
By Corinne Murdock |
Gov. Katie Hobbs is now taking credit for the family tax rebate she opposed initially — and had a state agency break the law in doing so, according to legislative leaders.
Hobbs championed the tax rebate on Tuesday with several surprise links crediting herself for the Arizona Families Tax Rebate Program, including an Arizona Department of Revenue (ADOR) application page for the program displaying her headshot. In a video and press release, Hobbs indicated that she played a major role in passing and had always fully supported the initiative.
“I made a promise that when I took office, I would take every opportunity I had to make it easier for Arizonans to provide for their families,” said Hobbs. “I’m so pleased to be able to deliver this relief.”
However, the webpage and promotional material in concert with Hobbs’ announcement runs afoul of the law on the rebate.
“[N]o letter relating to the Arizona families tax rebate issued under this section shall be sent from the governor’s office, be sent on the governor’s letterhead, or reference the governor’s office,” read SB 1734.
Sen. President Warren Petersen (R-LD14) and House Speaker Ben Toma (R-LD27) issued a cease and desist letter to ADOR over Hobbs’ announcement. The letter declared that the application page that Hobbs directed Arizonans to use was an impermissible detour and an illegal expenditure of public funds.
“While any violation of a controlling statute is troubling in its own right, the Department’s letter compounds an institutional insult with injury to Arizona taxpayers by unlawfully expending significant sums of public money to disseminate what is, in part, a political message,” stated the letter.
The budget did include a somewhat prophetic provision concerning Hobbs: a worry that the governor would subvert policy for political gain.
“Animating this provision was the Legislature’s concern that Governor Katie Hobbs would subvert a commonsense policy measure into a self-serving political stunt on the taxpayers’ dime,” stated the cease and desist letter. “[T]he Department impermissibly misdirected rebate recipients on a detour through the Governor’s curated, self-promotional online platform. This is clear violation of Arizona law.”
State Sen. Jake Hoffman (R-LD15), chairman of the Arizona Freedom Caucus, lamented that ADOR would be on the hook for Hobbs’ public relations display.
“The sad reality exposed by this situation is that Katie Hobbs doesn’t care about anyone other than herself. She tried to play fast and loose with the law, as she so often does, and forced Director Woods to violate it,” said Hoffman. “Thanks to Hobbs, he is now personally liable for $2M+ in illegally spent funds, a 20 percent penalty, court costs, and attorneys’ fees. And with a statute of limitations of 5 years, Katie has given Director Woods the gift of many sleepless nights for years to come.”
Hoffman advised other government agencies to take heed of ADOR’s alleged mistake by resisting pressure from the governor to act and by keeping receipts for everything the governor and her office may request.
Concerning Hobbs taking credit for the program, State Sen. President Pro Tempore T.J. Shope (R-LD16) indicated in a response post that she wanted “no part” of it. Shope said credit was due to the Arizona Freedom Caucus.
“I know the Governor wanted no part of this tax rebate but thankfully, the @AZSenateGOP & @AZHouseGOP caucuses, led by the @AZFreedomCaucus, stood strong and demanded it be part of the State Budget,” said Shope.
State Rep. Austin Smith responded that no House or Senate Democrats contributed to the tax rebate package initiated by the Arizona Freedom Caucus.
Hobbs’ spokesman, Christian Slater, told Capitol Media Services that the governor had supported the tax rebate by signing the budget, despite her initial opposition to the program.
The Sen. Republican Caucus similarly criticized Hobbs for failing to ascribe credit to those who came up with and fought for the rebate.
“You’re a little late to the party,” said the caucus. “Glad you love Republican policies as much as we do. They really do make our state a better place to live, work, and play.”
Sam Stone, “Breaking Battle” radio show host and former Phoenix City Council candidate, called Hobbs’ 180 on the program “pathetic.”
The Arizona Families Tax Rebate Program entitles Arizona taxpayers with dependent children a single payment of up to $750. Approximately 750,000 Arizona families may be eligible.
The rebate metes out to $250 per dependent under the age of 17 and $100 per dependent over the age of 17 as claimed on 2021 returns. A taxpayer can’t claim more than three dependents, regardless of age.
Eligible taxpayers are those who: filed a full-year resident personal income tax return for the 2021 tax year; claimed at least one dependent tax credit for the 2021 tax return; filed the 2021 tax year Arizona personal income tax return as the only taxpayer on a single, married filing separate, or Head of Household return, or as the primary or first-listed taxpayer if filed jointly; and had at least $1 in Arizona personal income tax liability in tax year 2021, 2020, or 2019.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
