Arizona Tax Credits

Arizona has several tax credits that allow individuals to direct their state income taxes to the charities and schools of their choice. These include two nonrefundable credits for Qualifying Charitable Organizations including Foster Care and public, charter and private schools and a credit for contributions to Certified School Tuition Organizations. These credits can be claimed by individual taxpayers and by shareholders of S corporations. These tax credits require the taxpayer to obtain a receipt from the qualified organization and provide it to their tax preparer.

The MFRF tax credit allows individuals to redirect their state income taxes to the Arizona Military Family Relief Fund, a great way to support our Veterans and their families. Cash contributions to the MFRF are eligible for a credit of up to $200 single/head of household or $400 married filing jointly. Credits are taken when a person files their Arizona personal income tax return, and they reduce their state tax liability dollar-for-dollar – no itemizing is required!

In addition, the Arizona Tax Switcher Credit allows individuals to contribute to an STO and claim a dollar-for-dollar reduction of their current state tax liability. The credit can be claimed in addition to the refundable Arizona Family Tax Credit and federal itemized deductions on Schedule A of the Arizona Form 1040.

The Quality Jobs Tax Credit is a refundable state income tax credit for companies that create jobs and make capital investments in Arizona. To qualify, companies must submit a pre-application to the Arizona Commerce Authority and demonstrate that they will meet the required investment and job creation thresholds within a year.

Other Arizona Tax Credits

The Arizona Public School Fee tax credit is a nonrefundable state income tax credit for fees paid by taxpayers to support public school extracurricular activities, character education programs, career and technical education industry certification assessment, preparation courses, and materials for standardized college credit or readiness testing, and CPR training. Unlike other state income tax credits, unused amounts do not carry over to future years.

The MPPP is a refundable credit for companies that produce more than 50% of their movie, television show, or commercial in an Arizona production facility or practical location. To qualify, the company must submit an application for preapproval to the ACA. The ACA will review the application and assign a priority placement number. This credit can be claimed for up to 5 years, and the company is responsible for reporting and paying the associated taxes.