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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
tax credit qualifying charitable organizations
Purpose
Modifies the definitions of qualifying charitable organizations (QCOs) and services for the purposes of the Credit for Contributions to QCOs.
Background
A QCO is a 501(c)(3) nonprofit organization or a designated
community action agency that receives Community Services Block Grant Program
monies. A QCO must spend at least 50 percent of its annual budget on services
to: 1) Arizona residents who receive Temporary Assistance for Needy Families (TANF)
benefits; 2) low-income Arizona residents and their households; or
3) Arizona residents who have a chronic illness or physical disability. A qualifying
foster care charitable organization (QFCO) is a QCO that also: 1)
provides services to at least 200 qualified individuals in Arizona; and 2)
spends at least 50 percent of its budget on services to qualified individuals
in Arizona.
For QCOs, services include cash assistance, medical care, child care, food, clothing, shelter, job placement and job training services or any other assistance that is reasonably necessary to meet immediate basic needs and that is provided and used in Arizona. For QFCOs, services include cash assistance, medical care, behavioral health services, child care, food, including snacks at the QFCO's foster youth events, clothing, shelter, job placement services, job training services, character education programs, workforce development programs, secondary education student retention programs, housing or financial literacy services or any other assistance that is reasonably necessary to meet basic needs or provide normalcy and that is provided and used in Arizona.
For TY 2025, statute allows an individual income tax credit for voluntary cash contributions to: 1) a QFCO of up to $618 for a single individual or head of household or $1,234 for a married couple filing jointly; and 2) a QCO of up to $495 for a single individual or head of household or $987 for a married couple filing jointly. A taxpayer may contribute to either or both types of organizations and claim a tax credit for either or both credits (A.R.S. § 43-1088).
The Joint Legislative Budget Committee fiscal note on S.B. 1496, as introduced, estimates that applying the definition of services used for QFCOs to QCOs would increase use of the Credit for Contributions to QCOs resulting in a reduction of state General Fund revenue collections, but the magnitude depends on how broadly the Arizona Department of Revenue interprets the statutes regarding eligible services (JLBC Fiscal Note).
Provisions
1. Modifies the definition of QCO to require the QCO to direct or spend, rather than only spend, at least 50 percent of its budget on services to Arizona residents who receive TANF benefits, are low-income or have a chronic illness or physical disability.
2. Defines direct as providing monies or financial or in-kind assistance to a QCO.
3. Expands the definition of services, for the purposes of a QCO, by adding behavioral health services, workforce readiness services and workforce development programs.
4. Defines behavioral health services, job placement and job training and workforce development program.
5. Makes technical and conforming changes.
6. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Defines direct as providing or allocating monies or financial or in-kind assistance to a QCO.
2. Makes technical and conforming changes.
Amendments Adopted by the House of Representatives
1. Reinstates separate definitions of services for QCOs and QFCOs and modifies the definition that applies to QCOS by:
a) adding behavioral health services, workforce readiness services and workforce development programs; and
b) requiring the provided services to meet basic needs, rather than immediate basic needs.
2. Defines behavioral health services, job placement and job training and workforce development program.
3. Removes, from the definition of direct, the allocation of monies or in-kind assistance to a QCO.
4. Reinstates the definition of job training services.
5. Makes technical and conforming changes.
Senate Action House Action
FIN 2/10/25 DP 4-3-0 WM 3/26/25 DP 5-2-0-2
3rd Read 2/26/25 18-10-2 3rd Read 6/24/25 37-18-5
Prepared by Senate Research
June 25, 2025
MG/ci