Formerly known as the “Working Poor” tax credit, the Charitable Tax Credit allows Arizona taxpayers to claim a dollar-for-dollar credit when they make donations to qualifying charities, and RMHC of Southern Arizona is a qualifying charity.

• For the 2023 tax year, the maximum amount of the credit is $841.00 for married taxpayers and $421.00 for single taxpayers or heads of household.
• For the 2024 tax year, the maximum amount of the credit is $938.00 for married taxpayers and $470.00 for single taxpayers or heads of household.
• Beginning in the 2023 tax year, the limits will increase each year with inflation, based on the Phoenix Metropolitan 12-month average consumer price index. The amounts will not be lowered, even if the CPI falls.
• You may be able to make credit-eligible contributions through payroll withholding. Check with your employer to see if your employer has agreed to withhold contributions for this credit from your pay.

The Arizona Charitable Tax Credit Coalition, or GiveLocalKeepLocal.org, is a collaboration between 30+ local Southern Arizona nonprofits. Ronald McDonald House Charities of Southern Arizona has worked together with our fellow charities to spread the word about the Qualified Charitable Organization (QCO) tax credit. This is a mutually beneficial partnership that has allowed taxpayers to better support their favorite causes.

There are five different qualified areas eligible for a tax credit, and you may be able to claim each of them in the same tax year, up to your tax liability from that year.

Qualified Charitable Organization
Qualified Foster Care Charitable Organization
Public Schools
School Tuition Organization
Arizona Military Relief Fund

Each have different requirements and limits. Married couples can actually reduce their State liability by up more than $5,000.00 if they were to contribute the maximum amount to each of these credits.

Please note you can use the credits for any particular tax year only up to your liability for that same tax year. However, many of these credits can be carried forward for up to five years if they are unused.

The Credit reduces your State tax liability, meaning that, after all credits and deductions, you could be eligible for a refund if you had State taxes withheld from your paycheck or paid estimated taxes. By reducing your initial liability, the Credit could have the effect of reducing the money you owe to the State or increasing your refund.

• As a “nonrefundable” credit, taxpayers may not claim credit that is more than their tax liability (in other words, what you owe the state before you start to apply deductions and credits. Think “top of the form” not “bottom of the form”.). You may, however, carry the unused credit forward for up to the next five years.
• As stated above, though, if you prepaid your taxes though regular paycheck withholding or estimated taxes, the effect of the credits may be to increase your refund (as your liability may be reduced below your prepaid taxes).

Credit-eligible contributions made to a Qualifying Charitable Organization or Qualifying Foster Care Charitable Organization that are made on or before tax day in April may be applied to either the current or the preceding taxable year for your Arizona State tax return.

As the maximum limits are adjusted for inflation, the new limits apply to the return you’ll file in the following year. For instance:

• If you make a donation from January 1, 2023 through April 16, 2024 with the intent of claiming that gift as a credit on your 2023 tax return, the $421/$841 limit applies.
• If you make a gift any time in 2024 or thorugh April 15, 2025, the the new limits of $470/$938 apply.
• Confused? We don’t blame you! Remember to always contact your tax professional to learn about your specific situation.

In order for donations to qualify for your federal tax return, they must be made by December 31 of that tax year. (And remember that you can’t “double-dip”. If you’re claiming a gift as a State credit, that amount can’t also be claimed as a federal deduction.)

The requirement to itemize deductions on the State return has been eliminated.  You cannot claim both a tax credit and an itemized deduction for the same contribution on your State return.

Additionally, beginning with the 2019 tax year, other donations (for which you do NOT claim the tax credit) may be eligible for a 25% deduction – even if you do not itemize and instead use the standard deduction.