2025 Arizona Tax Brackets

Arizona offers several tax credits and deductions to its residents. Here’s an overview of some key opportunities:

1. Credit for Contributions to Qualifying Charitable Organizations (QCO):

• Purpose: Encourages donations to organizations that provide immediate basic needs to Arizona residents who receive temporary assistance for needy families (TANF) benefits, are low-income residents, or individuals with chronic illnesses or physical disabilities.
• 2025 Contribution Limits:
  • Single Filers, Married Filing Separately, or Head of Household: Up to $495.
  • Married Filing Jointly: Up to $987.
• Claiming the Credit: Donations made between January 1, 2025, and April 15, 2025, can be applied to either the 2024 or 2025 tax return. To claim the higher 2025 credit amount, the donation should be reported on the 2025 return filed in 2026.

2. Credit for Contributions to Qualifying Foster Care Charitable Organizations (QFCO):

• Purpose: Supports organizations that provide immediate basic needs to at least 200 qualifying individuals in the foster care system.
• 2025 Contribution Limits:
  • Single Filers, Married Filing Separately, or Head of Household: Up to $618.
  • Married Filing Jointly: Up to $1,234.
• Claiming the Credit: Similar to the QCO credit, donations made between January 1, 2025, and April 15, 2025, can be applied to either the 2024 or 2025 tax return. To utilize the higher 2025 credit amount, report the donation on the 2025 return filed in 2026.

3. 529 Plan Contributions:

• Purpose: Encourages saving for education expenses.
• Deduction Details: Arizona provides an income tax deduction for contributions made to any state’s 529 plan. This deduction complements the federal tax benefits, where assets grow tax-free, and withdrawals are tax-free when used for qualified education expenses.

4. Work Opportunity Tax Credit (WOTC):

• Purpose: A federal tax credit designed to incentivize employers to hire individuals from specific target groups that face barriers to employment.
• Credit Amount: Ranges from $1,200 to $9,600 per eligible employee, depending on the target group and the number of hours worked.
• Eligibility: Employers who hire individuals from designated target groups and ensure the new employee works a minimum of 120 hours in their first year.

Additional Considerations:

• Federal Tax Credits: While not specific to Arizona, residents may also benefit from federal tax credits such as the Earned Income Tax Credit (EITC), Child Tax Credit, and education-related credits.
• Stay Informed: Tax laws can change. It’s advisable to consult with a tax professional or refer to the Arizona Department of Revenue’s official website for the most current information.

By leveraging these credits and deductions, Arizona taxpayers can potentially reduce their state tax liability while supporting community initiatives and planning for future expenses.