Giving back to your community through charitable donations is a powerful way to make a difference in the lives of others. But did you know that in Arizona, your generosity can also benefit you financially? Arizona offers a charitable tax credit that allows taxpayers to receive a dollar-for-dollar reduction in their state income taxes by donating to qualifying nonprofit organizations like Oakwood Creative Care! This means you can support causes you care about and reduce your tax burden at the same time.

In this blog, we’ll walk you through Arizona’s charitable tax credit and how you can maximize this opportunity to support older adults with dementia through Oakwood Creative Care while getting a financial benefit.

What is the Arizona Charitable Tax Credit?

Arizona’s charitable tax credit is a state-specific benefit that allows taxpayers to donate to qualifying charities and receive a direct credit on their state income taxes. This isn’t just a deduction—it’s a credit, meaning the amount you donate directly reduces your tax liability, dollar-for-dollar.

For example, if you owe $500 in state taxes and donate $500 to an eligible nonprofit, your tax liability could be reduced to $0. Even if you don’t owe enough in state taxes to offset your donation, you can still receive a refund for the amount of the credit.

This credit applies to donations made to a 501(c)(3) nonprofit organization, like Oakwood Creative Care! The maximum credit for individuals donating to Oakwood is $470, and $938 for married couples filing jointly.

Here’s the key point: You get a dollar-for-dollar credit for donations made to qualifying charities. That means donating $400 to Oakwood Creative Care will reduce your state income tax bill by $400.**

Here’s another example to help illustrate:

• Let’s say you’re an individual taxpayer and owe $600 in Arizona state taxes.
• If you donate $400 to a qualified nonprofit, you can claim the $400 charitable tax credit.
• After applying the credit, your Arizona state tax bill is reduced to $200.

In other words, your $400 donation costs you nothing because you saved that same amount on your state taxes. And, if you donate more than your total state tax liability, the excess credit can carry over to the next year.

Donating to Oakwood Creative Care and claiming your Charitable Tax Credit is actually super simple. What you need to remember is this:

• You don’t need to itemize your taxes, and you can still claim the Education Tax Credit along with the Charitable Tax Credit.
• Keep a record of your donation, including receipts and acknowledgments from the nonprofit.
• You have until April 15 to make a qualifying donation for the previous year.
• When filing your state taxes (either through a tax professional or using tax software), report your donations on Form 321 (for Charitable Contributions). The Arizona Department of Revenue will use this form to apply the credit to your tax return.
• Oakwood’s QCO Tax CODE is 20560. 
• Please consult your tax advisor for specific questions related to your tax situation!**