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Arizona: Highlights of Changes For Filing 2016 Income Tax Returns

  • Doubles the maximum income tax credit claimed for contributions to a Qualifying Charitable Organization. $400 single/$800 MFJ.
  • Creates a separate income tax credit ($500 single/$1,000 MFJ) for contributions to a Qualifying Foster Care Organization on new Form 352. Any unused carryover from prior to 2016 must be claimed on Arizona Form 321 (QCO).
  • Extends the deadline for contributions to QCOs and QFCOs from Dec. 31 to Apr. 15 to be eligible for the income tax credit. For more info, see Arizona Publication 710 at azdor.gov.
  • Expands the income tax credit for public school extracurricular activities to include fees and contributions for activities that do not charge a fee for students to participate and for CPR instruction.
  • The Credit for Contributions to Private School Tuition Organizations (PSTO's) increased slightly. The credit is in two parts. For the first credit, up to $545 can be deducted by a single or head or head of household, or $1,090 for married filing jointly. Limits for the second credit are $542 or $1,083, so a total of $1,087 or $2,173 of PSTO contributions may be deducted.
  • The standard deduction has risen to $5,099 for single or married filing separately, and $10,189 for married filing jointly or head of household. Personal exemptions are still $2,100 per person. The first $7,199 of income for a single person is not taxed. For a married couple, the first $14,389 is not taxed. (Various credits may mean that the amounts are higher for some Arizonans.)
  • 2-year phase-in to conform AZ with federal special 50% bonus depreciation allowance. For 2016 property, Arizona bonus depreciation is 55% of the federal bonus depreciation (was 10%). For 2017 and later, AZ bonus will be 100% of the federal depreciation.
  • Arizona has conformed to federal due date for partnership returns. For 2016 returns filed in 2017, the new deadline is the 15th day of the 3rd month (Mar. 15 for calendar-year returns)
  • The corporate income tax rate is reduced to 5.5% (was 6%) for tax years beginning during 2016. It will drop to 4.9% for tax years beginning in 2017.

© 2006 Davis Tax Services. This material is provided as general information only and is designed to supplement our professional advice which is provided individually.