Arizona has several tax credit programs that allow you to "redirect" money that you would otherwise pay in taxes to certain types of organizations that have registered with the State. This will not usually save you money (see exception in next paragraph), but you can receive the satisfaction and other benefits of making donations to appreciative non-profits and schools instead of paying that money in taxes.
If you itemize deductions on your Federal income return, these credits can actually save you money! You get 100% of the donation back from the State in lower taxes but also lower your federal taxes by deducting the donation on your Federal taxes. For example, if your marginal tax rate (tax bracket) is 22%, you would save $220 in federal taxes for each $1,000 of donations. You would also lower your State taxes by $1,000 so you actually make $220 by donating to organizations that you like to support!
This credit is available for contributions to Qualifying Charitable Organizations (QCOs) that provide immediate basic needs to low income or otherwise needy residents of Arizona. To be a QCO, a non-profit has to apply to the state and be approved each year. You can find the list of QCOs for 2019 here. To claim the credit, use Form 321 using the QCO code from the list of QCOs.
The maximum amount of this credit is $800 for couples and $400 for single filers.
This credit is available for contributions to Qualifying Foster Care Organizations (QFCOs) that provide immediate, basic needs to foster kids. To be a QFCO, a foster care organization has to apply to the State and be approved each year. You can find the list of QFCOs for 2019 here. To claim the credit, use Form 352 using the QFCO code from the list of QFCOs.
The maximum amount of this credit is $1,000 for couples and $500 for single filers.
Suggestion: This is my favorite tax credit. Who is more deserving of support than foster kids? If you don't already have a favorite foster care organization, I highly recommend La Paloma Family Services. I have been giving to them for years and have seen first-hand how effectively they use tax credit donations to improve the lives of foster kids.
This credit is available for donations or fees paid directly to a public school in Arizona. To claim the credit, use Form 322. You will need the school’s County Code, Type Code, and District Code & Site Number (CTDS) number, which you can look up here.
The maximum amount of this credit is $400 for couples and $200 for single filers.
A lot of school districts have websites set up specifically for receiving this tax credit.
Here is the link for the Tucson Unified School District
Here is the link for the Chandler Unified School District
Here is the link for the Peoria Unified School District
Here is the link for the Gilbert Public Schools district
Here is the link for the Deer Valley Unified School District
Here is the link for the Paradise Valley Unified School District
Here is the link for the Phoenix Union High School District
Here is the link for the Phoenix Elementary School District
These tax credits are available for contributions made to Certified School Tuition Organizations which provide scholarships to students enrolled in Arizona private schools. To claim the credits, use Form 323 ("Original" credit) and Form 348 ("Switcher" credit). Here is the list of Tuition Organizations Certified to receive these donations in 2019. You can read more about these credits here.
For the 2020 tax year, the maximum amount of this credit is $1,179 for couples and $590 for single filers.
Note: All of the tax credits above are cumulative and non-exclusive, meaning that you can claim all of them. However, you can only reduce your state income taxes by the amount that you would normally pay for the year. To ensure that you will be able to use the credits above, check your Arizona tax filing from last year to see how much you paid in state income taxes.
Another way to make sure you are able to benefit from the tax credit is to file your taxes BEFORE making the donation. For example, if you file in February, you can claim the credits by promising to make the donations before April 15th. You will then know exactly what your tax liability is and exactly how much you can claim in credits. Another benefit of this approach is that you will usually receive your tax refund from the State before making the donation, as opposed to paying it out-of-pocket and then having to wait for the refund. Just make sure to follow through with the donation!