The Pennsylvania Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs allow businesses to utilize their Pennsylvania tax liability to provide scholarships to needy students. A business paying Pennsylvania taxes can get up to a 90% state tax credit for contributions made to state-approved organizations which help children in kindergarten through 12th grade.
The tax credit procedures for the EITC and OSTC programs are identical -- the difference between the two is the beneficiaries:
- EITC has 3 tax credits available:
- Credits for contributions to an eligible "Scholarship Organization" (SO). The SO provides scholarships for students in Grades K-12 whose families meet program guidelines;
- Credits to a "Preschool Organization" (PKTC). The PKTC provides scholarships for students in Pre-K whose families meet program guidelines; and
- Credits for contributions to an "Education Improvement Organization" (EIO). An EIO provides funds to organizations which offer enhanced curricula to public schools.
- OSTC provides tax credits to enable students in Grades K-12 who reside in a low-achieving school (ranked in the lowest 15% of the Commonwealth) to receive scholarships.
Businesses paying Pennsylvania taxes complete a simple online application to participate in one of the above four programs. Upon approval, the taxpayer can receive a credit for between 75% – 100% of their Pennsylvania state tax liability by making a contribution to the Foundation for Jewish Day Schools.
If the business makes a two-year commitment for the same amount in each of the two years, it receives a state tax credit equal to 90% of the amount contributed. For a one-year commitment, the business receives a 75% state tax credit.
Pennsylvania businesses apply to participate by:
- Submitting an application to Pennsylvania’s Department of Community and Economic Development (DCED); or
- A business owner can join an Special Purpose Entity (SPE) at the Pennsylvania Education Partnership LLC, where the contributions and tax credits are passed through to the individual.
Pennsylvania awards these business tax credits on a first-come, first-served basis. If approved, the business will receive a letter from the DCED and then has 60 days to make its financial contribution to an approved organization such as the Foundation for Jewish Day Schools. The Foundation will provide the business a written acknowledgement which the business sends to the Commonwealth so the tax credits can be applied.
