Arizona is a great state to live in, and one of the reasons is the amazing opportunity we have each and every year to contribute to charitable organizations instead of paying state taxes - a.k.a. the Arizona charitable tax credit. Now before we jump in, a few disclaimers:
1. We’re not tax professionals. We’ve simply gathered info from the Arizona Department of Revenue and created this visual guide - please consult a tax professional.
2. We didn’t include tax credits for businesses or corporate credits, this is just for individual income tax credits that are the easiest for the average Arizonan to take advantage of. You might also want to check out these commonly overlooked tax deductions, too.
3. Get more information on updated 2024 tax brackets and deadlines so you're ready to go!
Arizona Tax Credit Basics
Taxes can feel… complicated, to say the least, so here’s the simplest possible definition of what the AZ tax credit program does:
You pay a certain percentage of your paycheck to AZ state income tax, or else you owe a certain amount at the end of the year when you file your taxes.
Arizona says that if you make a donation to one or more of the categories listed below (charitable tax credit, foster care tax credit, certified school tuition organization tax credit, or public school tax credit, you can either:
1. Get a refund of the state taxes you already paid, a dollar-for-dollar tax credit to match your contribution
or
2. Owe less in taxes to the state of Arizona than you did before
You'll just need to keep your receipts from your donation and keep an eye out for end-of-year giving statements from the organization, especially if you're taking advantage of multiple tax credits. They're required to either mail or electronically deliver this to you! Then, you'll provide it to your tax professional or complete the forms noted below if completing your state tax credits on your own.
Here's our visual guide to the four most popular Arizona tax credits. Jump to download a PDF copy.
Arizona Tax Credits
Real-Life Example
Guillermo paid $3,000 in Arizona Individual Income taxes last year. It was withheld throughout the year from his paycheck. He decided to make some donations at the end of the year.
Qualifying Charitable Organization: He donated $400 to St. Mary’s Food Bank
Qualifying Foster Care Organization: He donated $400 to Arizona Helping Hands
Public School Tax Credit: He donated $200 to his alma mater – Central High School
Since Guillermo has no other tax issues and paid the appropriate amount of tax to the state, he now works with his tax professional and fills out the forms noted above for each category, and will receive an AZ tax credit/refund of $1000 to match the donations he made. He'll just have to hold on to documentation like donation receipts or end-of-year giving summaries to prove the donations were made.
In another scenario, let's imagine Guillermo ended up owing the state $2000 in taxes at the end of the year. Perhaps it wasn't withheld from his paycheck. Now, by making the same donations, he would owe $1000 instead of $2000.
Of course, this can get way more complicated than Guillermo’s example, but just to illustrate – it’s really cool that you can donate to Arizona charities and schools *essentially* instead of paying some of your state taxes.
Arizona Tax Credits Frequently Asked Questions
Question: Can you get tax credits in just one category, or more than one?
Answer: You can get tax credits for multiple categories! Just keep in mind that you can’t get more money back from the state than you paid (or owe)… If Jane only owes $500 in state taxes, and she donates $600 total from the categories above, she’ll only get $500 in Arizona tax credits.
Question: Can you donate more than the maximums?
Answer: Yes, but you’ll only receive tax credits up to the maximums. If I wanted to give $5000 to a local pet charity on the QCO list – that’s great, but I’ll only receive $400 or $800 in tax credits (see row 5)
Question: Are my donations refundable?
Answer: No. Once you give, and help out an organization, you can't get that money back from them. But hopefully, if you played your cards right, you'll get an offsetting Arizona tax credit instead!
Conclusion
We hope this Arizona tax credit guide was helpful as you finish out the year and make some donations to grow the strength of our great state.
And maybe, it'll help you put some money aside for savings and investing. Check out our budget plan to get on track with your finances and put that Arizona tax credit to good work.
This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only.
