2023 Arizona Tax Credit Information
The 2023 Arizona Tax Credit programs for individuals allow you to make a positive charitable impact while receiving a credit that reduces your Arizona income tax liability. Your payments under any of the tax credit programs below will reduce your Arizona income tax dollar-for-dollar by the amount of your contribution. Taxpayers do not have to itemize their deductions to take advantage of these programs. However, IRS and Treasury Department regulations provide that in most cases, you are not able to take these contributions as a Federal itemized tax deduction, so please consult your tax preparer for advice specific to your tax situation.
Arizona School Tax Credits
The Arizona school tax credits include the following credits:
- Private School Tuition Organization tax credit – AZ Form 323: Credit of up to $655 for 2023 ($1,308 for married taxpayers filing a joint income tax return) for contributions to a Certified School Tuition Organization that provides scholarships or grants to students attending qualified private schools. Your contribution cannot be designated for the direct benefit of your own dependent, but can benefit any other student, even a relative. However, a taxpayer may not claim the tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer’s own dependent.
- PLUS/Switcher tax credit – AZ Form 348: Credit of up to $652 for 2023 ($1,301 for married taxpayers filing a joint income tax return) for Private Learning Uplifting Students (PLUS) contributions to a Certified School Tuition Organization that, like the original Private School Tuition Organization credit, provides scholarships or grants to certain qualifying students attending private schools. To qualify for this additional tax credit, the Arizona taxpayer must first donate the maximum under the original Private School Tuition Organization credit provision described above, and as with that credit, the contribution cannot be designated for the direct benefit of your own dependent but can benefit any other student, even a relative. However, a taxpayer may not claim the tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer’s own dependent.
- Public School Fee tax credit – AZ Form 322: Credit of up to $200 for 2023 ($400 for married taxpayers filing a joint income tax return) for payment of fees to an Arizona public school (including charter schools) for extracurricular activities, character education programs, standardized testing fees for college credit or readiness, preparation courses and materials for standardized testing, career and technical education industry certification assessment, CPR training and other qualified purposes. Unlike the two private school tuition credits, the fees can be paid for the benefit of your own child’s participation in a qualified activity.
The Arizona Department of Revenue’s Publication 707 contains helpful information about all of the School Tax Credits. In addition, see the Arizona tax form instructions for each credit for important additional details.
All of these school tax credits may be taken in the same year for a total of $1,443 ($2,883 for married taxpayers filing a joint income tax return). You are not required to have children to take these tax credits.
Note that activity fees for a designated student are not eligible to be treated as an itemized deduction on your Federal return, nor is any other donation payment that results in an Arizona Tax credit.
A list of Certified School Tuition Organizations is maintained by the Arizona Department of Revenue at:
An Arizona Department of Revenue listing of public and charter schools within Arizona is maintained at:
Qualifying Charitable Organization Tax Credit
A credit of up to $421 for 2023 ($841 for married taxpayers filing a joint income tax return) is allowed for cash contributions to Qualifying Charitable Organizations (AZ Form 321).
An Arizona Department of Revenue listing of Qualifying Charitable Organizations for calendar year 2023 is available at:
Qualifying Foster Care Charitable Organization Tax Credit
A credit of up to $526 for 2023 ($1,051 for married taxpayers filing a joint income tax return) is allowed for cash contributions to a Qualifying Foster Care Charitable Organization (AZ Form 352).
An Arizona Department of Revenue listing of Qualifying Foster Care Charitable Organizations for calendar year 2023 is available at:
Arizona Military Family Relief Tax Credit Fund
A credit of up to $200 for 2023 ($400 for married taxpayers filing a joint income tax return, AZ Form 340) is allowed for cash contributions to the Arizona Military Family Relief Fund (MFRF). This fund is administered by the Arizona Department of Veterans’ Services; it provides assistance to service members and their families faced with financial hardship caused by or related to the service member’s deployment. In creating this fund, the Arizona Legislature established an annual cap of $1,000,000 on donations that qualify for the tax credit. Donations in the MFRF Tax Credit fund are allowed on a first-come, first-served basis. The tax credit may only be used to the extent it reduces your State of Arizona income tax liability to zero. Unlike the other Arizona donation tax credits, any unused amounts may NOT be carried forward.
Online donations to this fund are capped at $850,000. Once $850,000 is reached, the fund accepts an additional $150,000 by mailed check. By the end of the year, the cap is generally close to being reached. For up-to-date information please see the ADVS Military Family Relief Fund webpage. Donations received after the $1 million cap is reached are returned to donors, so it is always best to make your contributions early. Before you can claim his tax credit, you must have received a receipt from the Arizona Department of Veterans’ Services indicating that your contribution has qualified for the credit.
Additional Things to Know About Arizona Tax Credit Donations
With the exception of donations to the Arizona Military Family Relief Fund, any tax credit donations discussed above that are made on or before April 15, 2024, may be applied to either the 2023 or 2024 Arizona tax return. Donations to the Arizona Military Family Relief Fund must be made by December 31, 2023, in order to qualify for a 2024 tax credit.
Tax credits for a given year may be used to the extent they reduce your State of Arizona income tax liability to zero. With the exception of the Arizona Military Family Relief Fund credit, unused tax credits can be carried forward for up to five years, until used.
For each of the tax credits, you must obtain a receipt of payment from the qualified organization. Be sure to retain a copy of that receipt and provide it to your tax preparer so that it can be claimed on your Arizona tax return.
The tax credits listed above are available only to individuals. In certain cases, an individual who is a shareholder of an S corporation may also claim two separate nonrefundable credits for contributions made to Certified School Tuition Organizations when the S corporation qualifies for a corporate credit and elects to pass the credit through to its shareholders. Please consult your tax preparer for guidance as to the tax deductibility of any monetary donation.
This material has been prepared for informational purposes only and is not intended to provide or to be relied upon for tax advice. Please contact your TCI Advisor or your tax advisor should you have questions about these programs.