Know Your Arizona Tax Credits for Charitable Contributions

Believe it or not, 2023 is over, and it’s almost time to file your taxes for this year. Are you ready?

As you gather your paperwork to do your taxes, there’s some great news for Arizona residents: the state offers four big tax credits that you still have time to take advantage of. Each Arizona tax credit is tied to charitable giving, so you get to feel good about your contributions and save money on your taxes at the same time.

Here’s what you need to know to use these credits to lower your 2023 state tax bill.

Tax Credits Vs. Tax Deductions

For federal income taxes, you’re allowed to claim a tax deduction for charitable giving if you itemize deductions.

When you take a tax deduction for charitable giving, the amount you give is subtracted from your taxable income. This reduces the total amount of tax you owe. For example, if you donate $100 to Big Brothers Big Sisters and your total tax rate was 12%, you save a total of $12 on your tax bill. 

When you take a tax credit for charitable giving, the amount you give is subtracted from the total tax you owe. In this situation, that $100 donation will save you $100 on your tax bill. For Arizona residents who take advantage of special tax credits, that’s like getting some free money to give to charities: instead of paying it to the state government, you instead can choose to give it directly to a group whose work you believe in and want to support.

Rules for Claiming Arizona Tax Credits for Donations

There are four major tax credits that you can use to offset certain charitable donations in Arizona. For all of them, you have until April 15, 2024 — or until the date you file your return, if you do so early — to donate for the 2023 tax year. That means you can still donate and get the credit if you haven’t already!

To claim the credit, you’ll need to make sure donations go to a qualified organization. Each of the four credits has a maximum eligible amount as well. You can always give more, but your tax credit will be capped at the maximum.

Qualified Charitable Organization (QCO) Credit 

The QCO Credit is available for donations to qualified charities that serve the needs of low-income families struggling to fulfill their basic needs for food, shelter and healthcare. There are hundreds of Arizona-based organizations to choose from. 

  • Maximum Credit: $421 single/$841 married filing jointly

Qualified Foster Care Organization (QFCO) Credit

The QFCO Credit is very similar to the QCO credit, but is carved out specifically for charities that support children in foster care. The credit has more generous limits, but there are far fewer organizations that qualify. 

  • Maximum Credit: $526 single/$1,051 married filing jointly

Private School Credit

The Private School Credit is available for donations to a Private School Tuition Organization. These groups provide scholarships for needy students to attend private schools in Arizona. This tax credit is actually two separate credits; the amount you donate will determine whether you need to apply for one or both credits when you file your taxes.

  • Maximum Credit: $655 single/$1,308 married filing jointly

Public School Credit

The Public School Credit is available for donations to Arizona public or charter schools in support of eligible activities and programs. It’s also available to families who have directly paid fees to a school for these activities.

  • Maximum Credit: $200 single/$400 married filing jointly

The Bottom Line

Giving to charities is always worthwhile. It makes you feel good, and it helps people and organizations in need. And if you can earn a little reward for your efforts in the form of a tax credit, even better! As you plan for this year’s taxes, remember that it’s not too late to donate to an Arizona school or charity to take advantage of a tax credit for 2023.