Assigned to FIN FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
REVISED
FACT SHEET FOR S.B. 1496
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 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). FACT SHEET - Revised
S.B. 1496
Page 2
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. Eliminates the definition of services used for QCOs and applies the definition of services used
for QFCOs to QCOs.
3. Redefines job training services as job placement and job training services and includes in the
definition work activities, as defined, and any other preparation and training used toward
obtaining a high school equivalency diploma.
4. Makes technical and conforming changes.
5. Becomes effective on the general effective date.
Revisions
• Updates the fiscal impact statement.
Prepared by Senate Research
February 7, 2025
MG/ci