Xerxes Nabong, CFP®, CDFA®
Philip M. Maliniak, CRPC®
Margaret V. Little, CFP®, CDFA®
Nicole Brown-Griffin, AFC®, CFP®, CDFA®, EA
Aaron Petty
Jacinta Gauvin, AAMS®
Hampton Roads: (757) 394-3486
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Orange County: (949) 660-8869
Reduce Your Arizona State Taxes with Tax Credits – Here’s How
As an Arizona taxpayer, you have the opportunity to reduce your state tax liability dollar-for-dollar through Arizona’s tax credit programs while supporting causes that matter to you. Unlike tax deductions, which reduce taxable income, tax credits provide a direct reduction of your Arizona state tax bill, making these contributions a powerful financial planning tool.
Can I Make a Donation to Benefit Me for Tax Year 2024?
Yes! You have until April 15, 2025, to make contributions for tax year 2024, allowing you to retroactively claim the credits on your 2024 Arizona tax return.
How It Works
- Make a Contribution – Donate to an eligible organization within one of the Arizona tax credit categories.
- Receive a Dollar-for-Dollar Credit – Apply your donation as a credit against your Arizona state tax liability.
- Claim the Credit on Your Tax Return – Use the proper Arizona tax forms to receive your tax credit. If your tax liability is lower than your credit amount, the excess can be carried forward for up to five years.
Arizona Tax Credit Opportunities
Below are Arizona Tax Credit opportunities, what it supports, and 2024 and 2025 contribution limits.
1. Private School Tuition Tax Credit
- What It Supports: Scholarships for K-12 students to attend private schools in Arizona.
- Contribution Limits: 2024: $1,459 (Single) / $2,910 (Married). 2025: $1,535 (Single) / $3,062 (Married).
- How to Donate: Contribute to a School Tuition Organization (STO) such as Arizona Tuition Connection or those listed on AZ Tax Credit Funds.
- Claim With: Forms 323 and 348
2. Qualified Charitable Organization (QCO) Tax Credit
- What It Supports: Nonprofits that help low-income families, the homeless, and individuals in need.
- Contribution Limits: 2024: $470 (Single) / $938 (Married). 2025: $495 (Single) / $987 (Married).
- How to Donate: Give to approved QCOs, such as St. Vincent de Paul or Habitat for Humanity (Full List of QCOs).
- Claim With: Form 321
3. Qualified Foster Care Organization (QFCO) Tax Credit
- What It Supports: Organizations that provide services to Arizona foster children.
- Contribution Limits: 2024: $587 (Single) / $1,173 (Married). 2025: $618 (Single) / $1,234 (Married)
- How to Donate: Donate to organizations like Arizona Friends of Foster Children Foundation (More QFCOs).
- Claim With: Form 352
4. Public School Tax Credit
- What It Supports: Extracurricular activities, arts, and after-school programs at Arizona public and charter schools.
- Contribution Limits: 2024 & 2025: $200 (Single) / $400 (Married)
- How to Donate: Contribute directly to your local public or charter school (Find a School).
- Claim With: Form 322
5. Military Family Relief Fund Tax Credit (Limited Availability)
- What It Supports: Arizona veterans and their families facing financial hardship.
- Contribution Limits: 2024 & 2025: $200 (Single) / $400 (Married)
- Important Note: Online donations for 2025 tax credits will be accepted until the $1 million cap is reached. Donations made after the cap will be charitable donations, not tax credits. Check the estimated donations received before contributing.
- How to Donate: Contribute to the Arizona Military Family Relief Fund.
- Claim With: Forms 340
Tax Credits vs. Tax Deductions
- Tax Credits (like those above) directly reduce your Arizona state tax liability dollar-for-dollar.
- Tax Deductions reduce taxable income, lowering the amount of income subject to taxation but not directly offsetting your tax bill.
Examples of Charitable Donations That Are Tax Deductions (Not Credits):
- Donations to a church or religious organization
- Contributions to a national charity (e.g., Red Cross, American Cancer Society)
- Donations to a nonprofit hospital or museum
While these donations may qualify as federal itemized deductions, they do not provide an Arizona state tax credit.
Maximize Your Tax Savings
The best part? You can combine multiple Arizona tax credits to maximize your tax benefits each year! These contributions allow you to support your community while keeping your tax dollars in Arizona.
For more details and a full list of eligible organizations, visit AZ Tax Credit Funds.
If you have any questions or would like to discuss how these tax strategies fit into your overall financial plan, feel free to reach out!
Your Team at Wealth Avenue,
