Q&AZ: How can a charity become eligible for Arizona's tax credit?

By Vaughan Jones
Published: Monday, May 9, 2022 - 8:32am

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Child holding a jar of coins for charity
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With tax season over, some Arizonans got a credit by donating to one of many qualified charitable organizations.

Through our Q&AZ Project, a listener asked: What do charities need to do to qualify to be one of Arizona’s qualified tax credit organizations?

There are currently about 1,100 tax-credit eligible charities in Arizona, per the state’s Department of Revenue.

Rebecca Wilder is with the department. She says there are five qualifications that an organization must meet in order to be eligible for the credit.

She says a charity must help meet immediate basic needs of either chronically ill or physically disabled individuals, or those in need.

“They need to serve Arizona residents who may receive temporary assistance for needy families, that's TANS benefits, or, they’re low-income residents whose household income is less than 150% of the federal poverty level,” said Wilder.

The charity must also be exempt from federal income taxes, spend at least 50% of their budget on services to Arizona residents, and affirm that they will continue spending that much on the services.

Wilder says the current version of the tax credit statutes was put in place in 1998, and the qualifications were expanded in 2012.

She says 163 organizations applied in 2021, and 41 were accepted. Interested charities can apply through the Arizona Department of Revenue.

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