Arizona's Charitable Tax Credits

Why pay Arizona income taxes when you can donate instead? Your dollars go further in helping those in need while reducing demand on Arizona government programs.

Introduction to the 2021 Arizona Charitable Tax Credits

There are five (5) different types of charitable donation credits to choose from. Limits to the different types is related to your filing status; Single, Head of Household (HOH), Married Filing Separate (MFS) or Married Filing Joint (MFJ). TOTAL credits available Single/HOH/MFS $2,519 | MFJ $5,035

(1) Arizona Military Family Relief Fund Credit

Single/HOH/MFS $200 | MFJ $400

This credit must be made in the same tax year you wish to claim it and is limited to first $1,000,000 of contributions received. I recommend you contribute early in the year as this fills up fast!

When claiming any of the following credit types you may contribute by 04/15/2021 for best effective use of either the 2020 or the 2021 tax year.

(2) Qualifying Charitable Organizations that provide assistance to Arizona residents who are low income, chronically ill or have physically disabled children.

Single/HOH/MFS $400 | MFJ $800

(3) Qualifying Foster Care Charitable Organizations providing foster-care community services. We love our animals, but this is for human benefit only.

Single/HOH/MFS $500 | MFJ $1,000

(4) Arizona Public/Charter School Tax Credit to support extracurricular activities that require students to pay a fee in order to participate.

Single/HOH/MFS $200 | MFJ $400

See also Arizona Publication 707 – School Credits

(5) School Tuition Organization Tax Credit

This type is comprised of two levels: The Original and The Overflow. Curious as to why? Ask me!

2021: "Original" Credit - Form 323, up to $611 Single/HOH/MFS, $1,221 MFJ
2021: "Overflow" Credit - Form 348, up to $608 Single/HOH/MFS, $1,214 MFJ

Single/HOH/MFS $1,219 | MFJ $2,435

Note: There are higher STO limits for certain businesses if eligible. Contact us for more information.

Good Questions:

Q) I love
XX Organization; can I just contribute to one charity and claim ALL credits?

A) No. The credits available are first capped at the category level. You can contribute more to a charity, but you'd be limited to the credit for that category. For instance – you could give $10 to a hundred different of Arizona's public schools for a total of $1,000, but you’d only be able to take credit on your capped max of $200 ($400 MFJ). The excess would still count as a charitable contribution.

Q) I file Married Filing Separate and my spouse doesn't do any of these credit donations; can I use them all on my separate return?

A) No. This is where things can get a little more complicated. The limits are tied to the individual taxpayer more than to the filing status. Community Property rules sometimes can make a difference, but in this case you’d want to be very careful to expect more of a credit that what you’d be able to claim.

Q) Federal or State Standard deduction vs itemized. If I take a standard deduction instead of itemizing my deductions, can I still claim qualified credits?

A) YES! On your Arizona return you can claim 25% of your other charitable contributions (including non-cash contributions) as a separate deduction in addition to your standard deduction. Also, on your Federal return you may claim up to $300 for donations; this may be limited by other tax credits you take.

Talk with us to determine if taking advantage of this opportunity is right for you!