Arizona Tax Credits: Types, Forms, and Carryovers

Arizona tax credits cut your state income tax dollar for dollar, and because Arizona uses a flat 2.5% rate, a handful of them stacked together can erase most or all of what you owe.¹ The main ones available to individuals cover donations to qualifying charities, foster care charities, public schools, and private school tuition organizations, plus a property tax credit for low-income seniors and a credit for income tax you paid to another state. Most of the donation-based credits let you contribute as late as April 15 of the following year and still apply the credit to the prior year’s return, so you can wait, see what you owe, and give enough to wipe it out.

Charitable and Foster Care Credits (QCO and QFCO)

Two separate credits sit under A.R.S. § 43-1088. The Qualifying Charitable Organization (QCO) credit covers donations to certified nonprofits serving low-income Arizonans and people with chronic illnesses or physical disabilities. For 2026, the maximum QCO credit is $506 for single filers or heads of household and $1,009 for married couples filing jointly.²

The Qualifying Foster Care Charitable Organization (QFCO) credit works the same way but goes to nonprofits that spend at least half their budget on services for children in foster care. For 2026, single filers can claim up to $632 and joint filers up to $1,262.² You can claim both in the same year. A married couple maxing out both in 2026 would reduce their Arizona tax by a combined $2,271.³

Donations made during 2026 or between January 1 and April 15, 2027 can be claimed on your 2026 return.² The organization must hold active Department of Revenue certification, and each certified charity has a five-digit code you’ll enter on the form.

Public School Credit

Under A.R.S. § 43-1089.01, you can claim a credit for fees paid or cash contributions made to any Arizona public school for extracurricular activities, character education, and certain other approved purposes such as school meals and health programs. The cap is $200 for single filers or heads of household and $400 for joint filers. Contributions made by April 15 of the following year can be applied to the prior tax year.⁴

Private School Tuition Credits

Private school support flows through certified School Tuition Organizations (STOs), which award scholarships to students at Arizona private schools. There are two tiers, and you can claim the second only after maxing out the first.

The Original credit under A.R.S. § 43-1089 had 2025 limits of $769 for single filers or heads of household and $1,535 for joint filers. Once you hit the Original maximum, you become eligible for the Switcher (Overflow) credit, which for 2026 allows an additional $784 for single filers and $1,561 for joint filers.⁵ Both caps adjust for inflation each year, so check the current amounts before giving.

Property Tax Credit for Seniors and Low-Income Residents

A.R.S. § 43-1072 provides a property tax credit for Arizona residents who are at least 65 or who receive Title 16 public assistance income, provided they lived in the state the entire tax year. Homeowners and renters can both qualify, with different calculations for each.

The income thresholds are tight. Total household income must be under $3,751 if you live alone, or under $5,501 for larger households.⁶ You claim it on Form 140PTC, filed separately from the regular income tax return.

Credit for Taxes Paid to Another State

If you earned income in another state and paid income tax there, A.R.S. § 43-1071 lets you avoid double taxation. The credit equals the tax you paid to the other state on income that is also taxable in Arizona, capped at the Arizona tax on that same income.⁷ It doesn’t apply if the other state already gives Arizona residents a reciprocal credit against its own tax.

This credit has to be used on the same tax year the income was taxed elsewhere. There is no April 15 shift and no carryforward based on a later donation. If the other state later refunds any portion of the tax, you must report that to the Arizona Department of Revenue and pay the corresponding Arizona tax plus interest.⁷

The Forms You File

Each credit has its own form, and they all flow into Form 301, Arizona’s summary schedule for nonrefundable individual tax credits.

Form 321: contributions to Qualifying Charitable Organizations (QCO)
Form 352: contributions to Qualifying Foster Care Charitable Organizations (QFCO)
Form 322: fees and contributions to public schools
Form 323: Original credit for contributions to private School Tuition Organizations
Form 348: Switcher (Overflow) credit for additional STO contributions
Form 309: taxes paid to another state or country

Each form asks for the organization’s legal name, your donation date, and the exact amount. QCO and QFCO forms also require the organization’s five-digit Department of Revenue code. The department publishes a searchable list of certified organizations with their codes. Verify the code before you file. A wrong code, or a charity that has lost certification, means the credit gets denied.

How Arizona Credits Affect Your Federal Return

Because Arizona’s charitable and education credits give back the full amount of your donation as a state tax reduction, the IRS does not let you take a full federal charitable deduction for that same gift. Under final Treasury regulations, you reduce your federal charitable contribution deduction by the amount of any state tax credit you receive in return.⁸

In practice that zeroes out the federal deduction for these donations. Donate $1,009 to a QCO, receive a $1,009 Arizona credit, and the federal deduction for that gift is $0. There is a narrow exception when the state credit equals 15% or less of the gift, but Arizona’s credits are 100%, so it never applies here.⁸ A dollar-for-dollar state credit is still worth more than a federal deduction at most marginal rates, but keep Arizona-credit donations separate from other charitable gifts you plan to deduct federally.

Carrying Forward Unused Credits

Arizona’s nonrefundable credits can take your tax to zero but will not generate a refund. If credits exceed your liability, the excess doesn’t come back as cash. Most of the nonrefundable credits can be carried forward for up to five consecutive tax years.⁹ The QCO, QFCO, and public school credits all follow this five-year carryforward rule.⁴

With a 2.5% flat rate, stacking a QCO, QFCO, public school, and STO credit can quickly exceed what you owe. If you’re approaching that ceiling, spreading contributions across tax years rather than piling them into one may let you use the full benefit sooner.

Records to Keep

Hold onto donation receipts, bank statements showing each contribution, and copies of every credit form you file. The IRS recommends keeping records that support a credit for at least three years from the date you filed the return claiming it, or two years from the date you paid the tax, whichever is later.¹⁰ Because Arizona allows a five-year carryforward, you may still be using a credit from 2026 on a 2031 return. The safest approach is to hold documentation for at least three years after the return on which the credit is finally used.

1
Arizona Department of Revenue. Individual Income Tax Highlights
2
Arizona Department of Revenue. Credits for Contributions to QCOs and QFCOs
3
Arizona Legislature. Arizona Revised Statutes Title 43 Section 43-1088 – Credit for Contribution to Qualifying Charitable Organizations
4
Arizona Legislature. Arizona Revised Statutes Title 43 Section 43-1089.01 – Tax Credit; Public School Fees and Contributions
5
Arizona Department of Revenue. Credits for Contributions to Certified School Tuition Organizations
6
Arizona Department of Revenue. Tax Credits
7
Arizona Legislature. Arizona Revised Statutes Title 43 Section 43-1071 – Credit for Income Taxes Paid to Other States; Definitions
8
Internal Revenue Service. Final Regulations on Charitable Contributions and State and Local Tax Credits
9
Arizona Department of Revenue. Tax Credits
10
Internal Revenue Service. How Long Should I Keep Records?