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.
Becoming an SGO in Arizona
Arizona has not opted into the federal §25F credit, so there is no SGO certification pathway here yet. If Arizona opts in, an organization would need to meet the federal requirements that apply in every participating state:
- Be a 501(c)(3) nonprofit that is not classified as a private foundation.
- Spend at least 90% of the income you receive on scholarships, the remaining 10% is the only budget for all administration, including fundraising.
- Award scholarships to 10 or more students who attend more than one school.
- Do not earmark or reserve contributions for a specific, named student.
- Serve students in households at or below 300% of area median gross income.
- Appear on your state's certified SGO list, which the state submits to the U.S. Treasury.
Follow Arizona’s status above, and see how to start an SGO to prepare in the meantime.
Scholarship Granting Organizations in Arizona
57 Scholarship Granting Organizations currently serve Arizona through state tax-credit scholarship programs and national networks, the organizations most likely to administer the federal EFTC here once official §25F lists are certified.
Browse SGOs in Arizona →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 · June 13, 2026Arizona's §25F opt-in died in budget negotiations: the language was in the vetoed GOP tax omnibus but absent from the signed bipartisan budget
- State action · April 14, 2026Arizona Gov. Hobbs vetoes a second FSTC opt-in bill (SB 1142)
- State action · January 16, 2026Arizona Gov. Katie Hobbs vetoes FSTC / ECCA opt-in bill (SB 1106)
Learn more about EFTC
In-depth guides on how the program works, who qualifies, and how to participate.
- The real obstacle isn't politics, it's adoptionOnce a state opts in and the program is live, the question that decides whether the Education Freedom Tax Cred…
- Get the credit in your paycheck, not the refundMost people assume a January 2027 donation means waiting until the April 2028 refund to see the $1,700 back, r…
- The CPA's guide to §25FA practitioner's reference to IRC §25F (the EFTC / ECCA / FSTC): the $1,700 dollar-for-dollar credit, why it w…
- Year-end planning: which December mattersThe Education Freedom Tax Credit takes effect January 1, 2027, which turns the usual year-end playbook upside …
- The EFTC, explained for your communityA plain-language, forward-it-to-anyone explainer of the new federal scholarship tax credit: what it is (up to …
- Designating your gift to a schoolSection 25F bans earmarking a donation for any particular student, and that ban is exactly as wide as it sound…
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 →
Get EFTC updates in your inbox
Stay updated on opt-in votes, guidance, and deadlines as the January 2027 launch approaches.