Oftentimes, our office fields questions on how to reduce taxes. One of the perks of living in the state of Arizona is that residents have the ability to take advantage of various Arizona State tax credits. These tax credits can fulfill two components of your financial objectives.
First, and most importantly, you may be eligible to make a charitable contribution to a cause that you believe in. By supporting your chosen organization, you can make a true impact on a worthwhile cause.
Second, based on your filing status, you may receive a tax credit. To be clear, a tax credit is not a tax deduction. A tax credit gives you a dollar-for-dollar reduction of the tax you owe, while a tax deduction lowers your taxable income for the year.
With the Arizona tax credit program, you can spread your charitable donation out over several entities. The following list provides some guidance on these credits.
1. The Arizona Military Family Relief Fund Credit
The Arizona Military Family Relief Fund was created to provide financial assistance to service members, Veterans, and their families for unforeseen financial hardships caused by the service member's military service. The MFRF program is in place to assist our service members, Veterans, and their families in overcoming financial barriers. Common assistance includes, but is not limited to: rent/mortgage, utilities, car payments, etc.
With this useful tax credit, you can assist Arizona Veterans in need while also enjoying a dollar-for-dollar tax credit on your Arizona state tax return. This charity fund has a $1 million cap for refundable Arizona tax credits, so it’s best to get your contribution in early during the year. Once $1 million in donations is reached, contributions must be returned, therefore it's best to send your donation in early, so you are ensured a credit on your Arizona tax return. If you do donate and they’ve reached their cap, you will receive your money back. The contribution amounts are $200 for single filers and $400 for joint filers.
2. Public School Credit
The Arizona Public School Tax Credit is a program that allows Arizona taxpayers to contribute to the public school of their choice and receive a dollar-for-dollar credit on their state taxes.
Here is a list of schools that you can search (click here).
The contribution amount is $200 for single filers and $400 for joint filers.
3. Private School Credit
Arizona provides tax credits for contributions made to Certified School Tuition Organizations which provide scholarships to students enrolled in Arizona private schools.
The contribution amounts are $655 for single filers and $1,308 for married filers.
4. Additional Private School Credit
The Additional Private School Credit resulted from a law passed several years ago, allowing donors to contribute even more toward private schools. This is available to individual taxpayers who donate the maximum amount allowed under the Credit for Contributions to Private School Tuition Organizations and make an additional donation to a Certified School Tuition Organization.
For tax year 2023, the maximum credit allowed is $652 for single, heads of household and married filing separate filers and $1,301 for married filing joint filers. You may find more information here.
5. Qualifying Charitable Organizations (QCO)
This individual income tax credit is available for contributions to Qualifying Charitable Organizations that provide immediate basic needs to residents of Arizona who receive temporary assistance for needy families (TANF) benefits, are low income residents of Arizona, or are individuals who have a chronic illness or physical disability. The maximum credit allowed is $841 for married filing joint filers and $421 for single, heads of household, and married filing separate filers. Here is the list of qualifying charitable organizations.
6. Qualifying Foster Care Charitable Organization (QFCO)
This individual income tax credit is available for contributions to Qualifying Foster Care Charitable Organizations that provide immediate basic needs to residents of Arizona who receive temporary assistance for needy families (TANF) benefits, are low income residents of Arizona, or are individuals who have a chronic illness or physical disability, and provide immediate basic needs to at least 200 qualifying individuals in the foster care system. The maximum credit allowed is $1,051 for married filing joint filers and $526 for single, heads of household, and married filing separate filers. Here is the list of qualifying foster care charitable organizations.