Proposed federal tax regulations may forbid a federal tax deduction for any donations made which also qualify for state tax credits, if the credit is more than 15% of the total donated. Recent changes in federal tax laws, have increased the standard deduction allowed when filing taxes for 2018, which will also reduce the number of taxpayers who will itemize their deductions. The new standard deduction amounts for taxpayers are:

  • $12,000 – single or married filing separately
  • $18,000 – head of household
  • $24,000 – married filing jointly

If you don’t plan on itemizing your deductions, the proposed regulations are of less concern.

If the proposed regulations do become law, it will not affect donations which receive Arizona tax credits. Arizona state taxes are reduced dollar-for-dollar when you donate to charitable organizations, public or charter schools, or helping students with private school tuition.

The maximum Arizona state tax credit you can receive when donating to Heritage Elementary is:

  • $200 for single or head of household, $400 for married filing jointly

Remember, any unused credits due to a lack of a state tax liability can be carried forward for up to 5 years, so unless you do not pay any state tax year-after-year, it is likely that you will get the benefit at some point.