How Does the Arizona Charitable Tax Credit Work?

Arizona offers taxpayers a unique opportunity to directly influence how their state income tax dollars are used. Through various charitable tax credits, individuals can reduce their Arizona state income tax liability dollar-for-dollar by making qualifying donations to specific organizations. These credits are distinct from tax deductions, which only lower taxable income, providing a direct reduction in the amount of tax owed. This system allows taxpayers to support causes they care about while managing their state tax obligations.

Types of Arizona Charitable Tax Credits

Arizona provides several distinct charitable tax credits, each designed to support different types of qualifying organizations and causes. Understanding these categories is important for taxpayers considering how to direct their contributions.

The Qualified Charitable Organization (QCO) credit supports charities that provide immediate basic needs to Arizona residents, including those receiving temporary assistance for needy families (TANF) benefits, low-income individuals, or children with chronic illnesses or physical disabilities. These organizations are food banks, homeless shelters, or other social service providers. Donations to QCOs are claimed using Arizona Form 321.

The Qualified Foster Care Organization (QFCO) credit is for contributions to charities that provide ongoing services to individuals within the foster care system. Taxpayers claim this credit on Arizona Form 352.

The Public School Tax Credit supports contributions to Arizona public schools for specific programs or activities. This includes funding for extracurricular activities like sports or fine arts, character education programs, and certain standardized testing fees. This credit is claimed on Arizona Form 322.

The School Tuition Organization (STO) credit, sometimes referred to as the Private School Tuition Credit, supports scholarships for students attending qualified private schools. This credit has two tiers: the “Original” credit and the “PLUS/Switcher” credit. The Original credit is claimed on Arizona Form 323, while the PLUS/Switcher credit, which can be utilized after maximizing the Original credit, is claimed on Arizona Form 348.

Eligibility and Donation Requirements

To ensure a donation qualifies for an Arizona charitable tax credit, both the donor and the recipient organization must meet specific criteria. Any individual Arizona taxpayer is eligible to claim these credits. The most important aspect for the donation’s qualification lies with the recipient organization. Organizations must be certified by the Arizona Department of Revenue (ADOR) to receive tax credit donations. These entities are 501(c)(3) non-profit organizations.

Taxpayers should verify an organization’s qualified status before donating by checking the ADOR’s official website, where lists of certified QCOs, QFCOs, and STOs are maintained. This verification process ensures the donation will be eligible for the credit. Each certified organization is assigned a unique five-digit code that taxpayers must use when claiming the credit.

Donations must be made in cash to qualify for these tax credits. Non-cash or in-kind donations, such as goods or services, do not qualify. This ensures the donation provides direct financial support to the qualifying organization.

Donations can be made by April 15th of the year following the tax year for which the credit is claimed. For example, a donation made by April 15, 2026, can be applied to the 2025 tax year. However, for an organization to include the donation in its giving statements for a specific calendar year, the contribution must be made by December 31st of that year. This flexibility allows taxpayers to assess their tax liability before making their final credit-eligible contributions.

Credit Limits and Carryforward

Arizona sets specific maximum contribution amounts for each type of charitable tax credit, which can vary based on filing status. Taxpayers can claim these credits up to their Arizona income tax liability, meaning the credit cannot generate a refund if it exceeds the tax owed. If a taxpayer’s credit amount surpasses their tax liability, carryforward rules apply.

For the 2025 tax year, the maximum QCO credit is $495 for single filers, heads of household, or married filing separately, and $987 for those married filing jointly. The QFCO credit limit for 2025 is $618 for single filers, heads of household, or married filing separately, and $1,234 for married filing jointly. These amounts represent the maximum donation eligible for the dollar-for-dollar credit.

The Public School Tax Credit allows a maximum contribution of $200 for single filers, heads of household, or married filing separately, and $400 for married filing jointly. For School Tuition Organizations (STOs), there are two tiers of credits with their own limits for 2025. The “Original” STO credit (claimed on Form 323) has a maximum of $769 for single filers and $1,535 for married filing jointly.

After maximizing the “Original” STO credit, taxpayers can contribute to the “PLUS/Switcher” STO credit (claimed on Form 348), with 2025 limits of $766 for single filers and $1,527 for married filing jointly. It is important to note that these limits are for the donation amount that qualifies for the credit, not necessarily the total donation a taxpayer can make.

If the amount of a credit exceeds the taxpayer’s Arizona income tax liability for the current year, the unused portion can be carried forward. This allows the remaining credit to be applied against future tax liabilities for up to five consecutive tax years.

Claiming the Credit on Your Arizona Tax Return

Claiming Arizona charitable tax credits on your income tax return involves specific forms and careful record-keeping. The process ensures that your qualifying donations are properly recognized to reduce your state tax liability.

To claim the Qualified Charitable Organization (QCO) credit, taxpayers must complete Arizona Form 321 and submit it with their state income tax return. For the Qualified Foster Care Organization (QFCO) credit, Arizona Form 352 is required. These forms require taxpayers to enter the organization’s name and the amount donated.

The Public School Tax Credit is claimed on Arizona Form 322. For this credit, taxpayers need to report the school’s County Code, Type Code, and District Code & Site Number (CTDS) on the form. For the School Tuition Organization (STO) credits, Arizona Form 323 is used for the “Original” contribution, and Arizona Form 348 is used for the “PLUS/Switcher” contribution.

Once these forms are completed with the donation amounts, the credits are applied to reduce the Arizona tax liability dollar-for-dollar. This means if you owe $500 in state taxes and have a $500 qualifying credit, your tax bill is reduced to zero. Taxpayers should retain records of their donations, such as receipts from the qualifying organizations, as substantiation for their claims. These forms are then submitted along with your main Arizona income tax return.