EFTC in Arizona
Arizona had its legislature pass an opt-in bill, which the governor then vetoed. Also known as the Federal Scholarship Tax Credit (FSTC), the program was enacted as IRC §25F and takes effect January 1, 2027.
- Governor
- Katie Hobbs
- Democrat
- Status
- Governor vetoed
- As of 2026-04-14
- Program begins
- January 1, 2027
- Federal tax credit live
What's happening with EFTC in Arizona
Arizona's legislature passed a bill to opt the state into the federal Educational Choice for Children Act, but Governor Katie Hobbs vetoed it on 2026-04-14. Gov. Hobbs vetoed SB 1106 (Jan 16, 2026) and a second opt-in bill in April 2026, citing the need to wait for IRS regulations.
Unless the legislature overrides the veto or the governor reverses course, Arizona will not have designated Scholarship Granting Organizations when EFTC goes live on January 1, 2027. Arizona families would not be eligible for EFTC scholarships, even though donors anywhere — including in Arizona — can still claim the federal tax credit by giving to SGOs in participating states.
In practical terms: the federal tax dollars that Arizona donors choose to redirect to scholarships will fund students in other states instead of staying in Arizona communities. Local advocates, parents, and taxpayers can urge Arizona's leadership to revisit the decision before the program begins.
Frequently asked questions about EFTC in Arizona
Does Arizona participate in EFTC?
Not currently. Arizona's legislature passed an opt-in bill, but Governor Katie Hobbs vetoed it on 2026-04-14. The state would need either a veto override or a reversal from the governor to participate.
Who is the governor of Arizona and what is their position on EFTC?
Governor Katie Hobbs (Democrat) vetoed the legislature's opt-in bill. Gov. Hobbs vetoed SB 1106 (Jan 16, 2026) and a second opt-in bill in April 2026, citing the need to wait for IRS regulations.
Can Arizona residents donate to an SGO and claim the federal tax credit?
Beginning January 1, 2027, any U.S. taxpayer can claim a federal income tax credit of up to $1,700 per tax return for donations to a qualifying Scholarship Granting Organization, regardless of the state they live in. Because Arizona is not currently participating, donations from Arizona residents would need to go to SGOs in opted-in states — funding scholarships for students in those states rather than in Arizona.
When does the EFTC program begin?
The Educational Choice for Children Act program begins on January 1, 2027. Donations made on or after that date are eligible for the federal tax credit. Each participating state's governor must submit a list of qualifying Scholarship Granting Organizations to the U.S. Treasury by January 1 of each participating year.
Other states with the same status
States that have also governor vetoed.
Recent Arizona EFTC / FSTC news
Coverage of Arizona’s Federal Scholarship Tax Credit decisions and developments.
- State action · 2026-04-14Arizona Gov. Hobbs vetoes a second FSTC opt-in bill (SB 1142)On April 14, 2026, Arizona Governor Katie Hobbs vetoed SB 1142 — her second veto of a federal Scholarship Tax Credit (FSTC / ECCA / §25F) opt-in bill after rejecting SB 1106 in January. She again pointed to the lack of accountability guardrails and the absence of final federal guidance.
- State action · 2026-01-16Arizona Gov. Katie Hobbs vetoes FSTC / ECCA opt-in bill (SB 1106)Arizona Governor Katie Hobbs vetoed SB 1106 on January 16, 2026, blocking the state's participation in the Federal Scholarship Tax Credit (FSTC / ECCA / §25F) program. Hobbs cited a desire to wait for IRS regulations before committing.
Learn more about EFTC
In-depth guides on how the program works, who qualifies, and how to participate.
- What is ECCA / FSTC?A complete guide to the Educational Choice for Children Act (ECCA), also known as the Federal Scholarship Tax …
- The federal tax credit, explainedHow the Education Freedom Tax Credit (EFTC / §25F) works for donors: $1,700 per tax return, 5-year carryforwar…
- Scholarship eligibilityWhich K–12 students qualify for EFTC scholarships, the income limits, what schools and educational expenses ar…
- How states opt inHow a state opts in to the federal EFTC scholarship program: the governor's annual Treasury submission, legisl…
- EFTC for special-needs familiesHow families of K–12 students with disabilities can use EFTC scholarships to fund therapies, specialized instr…
- EFTC for homeschool & microschoolHow homeschoolers, microschool families, learning pods, and hybrid-school families can use EFTC scholarships, …
Make your voice heard in Arizona
Contact Governor Katie Hobbs and let them know that Arizona families want access to EFTC scholarships when the program begins January 2027.
Contact Governor Hobbs →