Stacie D. Shelby, CPA

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Arizona taxpayers have a unique opportunity to reduce their tax liability while making a profound impact on the lives of children and families. The state offers several tax credit programs, including those for foster care, charitable organizations and education.

A tax credit yields a larger impact on taxes than a simple deduction, as every dollar donated will either increase the return or lower what a taxpayer may owe. By contributing to these programs, taxpayers have a distinct opportunity to effect real change in the community at no cost to them.

Foster care tax credit limits for 2025

For the 2025 tax year, Arizona’s Foster Care Tax Credit allows taxpayers to direct a portion of their state tax obligation to a Qualifying Foster Care Organization like The Foster Alliance. The contribution limits are:

• $1,234 for married couples filing jointly
• $618 for single taxpayers

These credits are dollar-for-dollar reductions in state tax liability, meaning that every dollar donated reduces the amount owed to the state, up to specified limits. This provides a meaningful way for taxpayers to support foster children and families while retaining control over how their tax dollars are used.

For example, The Foster Alliance provides essentials such as clothing, shoes, beds, school supplies, hygiene kits, diapers, birthday bags and more for foster children throughout Arizona.

Since federal tax rules changed in 2017, increasing the standard deduction, there are fewer tax benefits through the federal tax program for individuals to give to charities. These changes have impacted individual giving, with a decrease of more than 6% nationally since. In Arizona, the QFCO program is paramount to the success of local charities serving our most vulnerable children.

Additional charitable tax credit programs

Arizona offers additional tax credits that can be used in conjunction with the QFCO credit. It is important to note that each type of tax credit has a specific limit. These include:

• Qualifying Charitable Organization Tax Credit: Under the QCO program, taxpayers can receive a dollar-for-dollar tax credit for donations made to eligible charitable organizations. These entities must meet specific criteria outlined by the Arizona Department of Revenue, including delivering services to low-income individuals and families. Examples of QCOs encompass food banks, homeless shelters and organizations offering medical assistance to the underprivileged. Visit the Arizona Department of Revenue's website for all the details, forms, and a list of qualifying organizations.
• Public School Tax Credit: Taxpayers can receive a credit of up to $400 for married couples filing jointly ($200 for single filers) by donating to Arizona public schools to support extracurricular activities.
• Private School Tuition Organization Tax Credit: This program allows taxpayers to contribute toward scholarships for students attending private schools, with separate limits for original and switcher tax credits.

Impact on the foster community

The impact of charitable contributions via Arizona's tax credit programs transcends mere tax savings. These donations profoundly benefit the foster community, providing crucial support to children and families in need. Consider the following examples of the tangible impact Arizonans filing jointly can make for foster children in the state:

1. 150 packs of underwear or socks

2.  Four bed or crib kits, including mattress, frame and sheets

3. 47 pairs of shoes

4. A month’s worth of clothing

5. Over a year’s worth of diapers

6. Nine youth birthday bags, including five presents, cake and decorations.

This tax season, consider how your contributions can change lives — and lower your tax bill at the same time. To learn more, please visit The Foster Alliance website or consult your tax professional.

Editor’s note: Stacie D. Shelby is a certified public accountant who serves as board chair of The Foster Alliance, a Phoenix-based nonprofit that provides essentials to Arizona children in foster care. Please send your comments to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.