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What is The Arizona Tax Credit?

by | Jan 15, 2022 | Blog, Tax Credits

arizona tax credit

There is nothing more worthwhile in witnessing your state taxes are well-spent. There is this fascinating Arizona tax credit that is significantly beneficial for taxpayers and the community. For one, parents can avail tuition assistance and award scholarships through tax credits made by citizens. Interestingly, this is only a share of the whole pie of Arizona’s tax benefits for donation. To all taxpayers in Arizona, check out the advantages of a tax credit, which can help improve your tax efficiency.

Before we discuss the tax benefits for donation in Arizona, it is essential to understand what the tax credit program in Arizona is.

Understanding Tax Credit in Arizona

Individuals, corporations, and some estates and trusts are subject to a state tax at a fixed or graduated rate on their taxable income. In the United States, tax rates vary depending on the states and entities. Respectively, most people strive to attain tax efficiency by employing tax credits.

In general, tax credit pertains to the number of money taxpayers can deduct from their taxable income. People prefer this over tax deductions because it reduces tax liability dollar for dollar. Moreover, there are three types of tax credits: nonrefundable, refundable, and partially refundable.

  • Nonrefundable tax credits are goods that are deducted immediately from tax liabilities until the tax owed equals zero. Unfortunately, it has an adverse effect on low-income taxpayers since they cannot use the total amount of the credit. According to the report of Investopedia, nonrefundable tax credits include mortgage interest credit, child adoption, education credit, child tax credit, child and dependent care credit, and retirement savings contribution credits.
  • Refundable taxes refer to the taxpayer’s money in full regardless of their income. It is the most beneficial tax credit since you can still receive a refund, even exceeding your tax liability. Earned income tax credit (EITC) is the most common refundable tax.
  • Partially refundable taxes, on the other hand, are money that you can refund depending on its given rate. For one, the American Opportunity Credit offers up to 40 percent of the credit as a tax payment. This type of tax credit is common to child tax and educational credits.

No matter what state we live in, we desire our money to be utilized well. In Arizona, its tax credit is similar to other states’ tax due, wherein it helps to reduce tax liability independently from any tax. Fortunately, Arizona gives full control to its taxpayers by allowing them to choose where they can allocate a portion of their taxes. They can receive a tax credit when they donate to an organization. Significantly, there are two types of tax credit available to individuals in Arizona for donations: Qualifying Charitable Organizations and  Qualifying Foster Care Charitable Organizations.


arizona tax credit

According to the Christian Family Care report, from 2011 to 2015, almost $34 million went to qualifying for Arizona charities. You do not know how much positive impact you have made on the community when you choose to reallocate your earnings. Here are the following tax credit opportunities you can choose from:

  1. The Arizona Military Family Refund Credit
  2. The Arizona Charitable Tax Credit
  3. The Arizona Public School Tax Credit
  4. The Arizona Private School Tax Credit
  5. Overflow/ Plus Private School tax Credit

If you are not aware of these tax benefits for donation in Arizona, this is your chance to take advantage of these tax credit opportunities. Let us continue to explore the varying tax benefits for donation.

Advantages of Tax Benefits for Donation

1. You are making a difference in the lives of the children and families in Arizona.

As you avail Arizona Foster Care Tax Credit, you are more than just lowering your tax bill. You are contributing for a greater purpose, making the lives of other people more meaningful. It is the most fulfilling advantage of a tax benefit for donation that you can attain.

If you are wondering what kind of help you can contribute to your chosen organizations, they can provide you with the list of items they purchase, depending on how much you are willing to donate. In the case of AZ Foster Care Tax Credit, a $500 can provide the following:

  • Sending a child to summer camp
  • Purchasing a new bag with school supplies and school clothes
  • Enrolling the kid for karate or dance classes
  • Giving a personalized birthday celebration, a new bike and shoes, and school clothes

In addition, your chosen organization also gives you a donor’s receipt, documenting the amount of money you donated, the date you made the donation, and your name. It is vital when claiming your deductions.

2. You are entitled to a charitable contribution deduction against your income tax.

One of the edges of tax benefits for donation is an entitlement for a tax deduction. It is an efficient way for the government to encourage taxpayers to donate to help them improve the lives of those who are in need of financial assistance. With this, the government incentivizes you to helping them extend the basic social services of the state by reducing your taxes. Plus, you are allowed to carry on the tax benefits you receive into the following years.

3. You are empowered to choose what’s best for your money.

When availing for Arizona’s tax credit, you have the freedom to choose where you want to put your taxes. It is among the advantages of tax benefits for donation that most people look after too. There are plenty of organizations you can choose from. You can always choose what matters most to you. Keep in mind that this decision has a significant impact on making a change in other people’s lives.

4. You are bolstering the partnership between the government and non-government organizations.

Another gain of tax benefit for donation is the ability to empower the partnerships between the public and private sectors. Over the years, taxpayers have been looking forward to availing tax credits from donations because of its altruistic approach. Since this type of tax credit gives taxpayers a choice to allocate their earnings to what matters most for them, both the public and private sectors continue to work hand-in-hand to stay true to their commitments. The more taxpayers patronize these types of tax credits; the public and private sectors are pumped up to do their duties in making the state more livable for everyone.


Arizona tax credit

Make a Change Now

As the saying goes, change begins within us. With all the advantages of tax benefits from donations mentioned, we hope you have realized what kind of difference you can make when you spare a portion of your earnings to help. When you want to positively change someone’s life, take part in the journey of Children’s Care Arizona. See for yourself a more personal gain in attaining tax benefit for donation.

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