Did you know that as an Arizona resident, you have the power to decide exactly how your tax dollars are spent? Beyond providing for community necessities and improvements, your state taxes can be redirected to help improve Arizona children’s lives in foster care.

As part of the state’s foster care tax credit program, your donation to a qualifying foster care charitable organization such as the Arizona Friends of Foster Children Foundation translates to a tax credit – which is a win-win for everyone involved. Thanks to this outstanding program, your donation will be matched dollar-for-dollar (up to a maximum credit), making it simple, fast, and free to give back to the children that need it most.

In this guide, we’ll explain:

How the Arizona tax credit program allows you to make charitable donations with your tax dollars
How to know if you’re making a donation that qualifies for an AZ tax credit
How the Arizona Foster Care Charitable Tax Credit works

Putting Your Taxes to Work in Our Community

Understanding which qualifying charitable organizations are eligible for the Arizona tax credit program, as well as how to claim your credit when filing state taxes properly, is key. We’re walking you through everything you need to know to claim your maximum credit while simultaneously supporting positive changes in your community.

Are charitable donations deductible in Arizona?

Yes. In the state of Arizona, you can legally claim tax credits for donations made to a qualifying charitable organization, including those that support children in AZ foster care.

Note that these tax credits are not the same as the public school tax credit you may claim when you have made contributions or paid fees to an Arizona public school. Other types of Arizona tax credit separate from the QCO and QFCO programs offered by the Department of Revenue include Credits for Contributions to Certified School Tuition Organizations and the University Research and Development Tax Credit.

How does the Arizona charitable tax credit work?

There are two separate Arizona programs that facilitate income tax credits for approved contributions. Arizona taxpayers filing their income tax return may claim a credit when they make cash contributions to:

Qualifying Charitable Organizations (QCO): Organizations that support the immediate basic needs to Arizona at-risk residents, specifically those currently receiving temporary assistance for needy families (TANF) benefits, individuals with a physical disability or chronic illness, and low-income residents.

The Arizona Department of Revenue provides a full list of qualifying organizations on their website, so you can confirm that your donation will be eligible for credit.

Here’s a useful breakdown that explains exactly how your donation to a qualifying charitable organization can help reduce what you owe in state taxes:

First, you make an eligible donation to an approved program (it can be a one-time cash contribution or a regularly repeating donation).
If the dollar amount you withheld is equal to or greater than your Arizona state tax liability, the tax credit will go directly towards increasing your state tax refund. If you do not owe the state any income taxes, you can carry the credits forward for five years.
Various tax credits can be used concurrently to reduce your overall Arizona income tax liability.
Depending on varying factors, you may be able to claim your donation on your federal income taxes as well.

Understanding the Arizona Foster Care Tax Credit

The AZ Foster Care Tax Credit is specifically designed to offer credit for cash donations made to:

Qualifying Foster Care Charitable Organizations (QFCO): Organizations that support the same impoverished individuals detailed above, as well as a minimum of 200 qualifying individuals within the Arizona foster care system. These organizations must spend at least 50% of their operating budgets on these services, as well as meet other state-determined requirements.
Donations must be completed by April 15 following the end of the taxable year in order to be applied to the current or previous taxable year.

Under this program, a credit is available for up to $500 for individuals or $1,000 for married filing jointly. All you need to do is make a cash donation, save your donation receipt, and file it with your state income tax return.