April 17th, 2020

Pa Tax Credits for Private Schools

DCED Pennsylvania EITC Program

Pennsylvania provides donors tax credits in return for donations that are used for tuition reduction scholarships for preschools and K-12 private schools that charge tuition.  A donor receives 90% of donation amount as a Pennsylvania tax credit used to offset Pa personal income tax, Pa bank shares tax, Pa insurance premiums tax and many other Pa taxes but not pa sales tax or pa employer withholding tax payments.  The Pa tax credit awardee must commit to a two year contribution in order to receive the 90% credit.  

DCED Tax credit award letters

The Department of Community and Economic Development (DCED) awards Pa EITC and OSTC tax credits via award letters send annually in spring and fall.  Existing donors can apply May 15 and get preferential treatment annually to apply early and use up the limited supply of Pennsylvania tax credits awarded on a first come basis.  On July 1 new donors can request an award letter but typically very few credits are available for new donors.

Special Purpose Entities (SPE’s)

SPE’s allow individuals to participate by joining an SPE and contributing to the SPE using the Pa tax credit already in place to contribute to the donor’s school of choice.  Our charity receives donations from 39 different SPE’s annually and sends scholarships to private schools.  The SPE’s send Pa tax credits to the individual donors on form K-1.  Donors must work for a business or own a business to utilize SPE Pa tax credits.  Non qualified donors can be assisted to qualify by purchasing shares in a Pennsylvania based public company.  Our SPE’s have a $3,500 minimum annual contribution.

Scholarships

Scholarships are given to students who’s family income is typically less than $100,000 annually.  The state publishes annual income limits for allowable scholarship requests.  Scholarships are limited to donor funds available for the child’s private school.

Pa tax credit for private school

The world seems a little upside down right now but redirecting your Pa taxes to a scholarship for a low income family at the school of your choice is a great way to help others return to normal in the fall as school starts back in session with some social distancing but also some opportunities for children that can excel and thrive in a private school select by their parents and affordable only because of your donation to scholarships.  Private schools include preschools that feed children prepared for education to kindergarten in public schools all over Pennsylvania. 

A list of private schools we have assisted is

located here

​and expands regularly as new private tuition based preschool and K-12 schools are funded by our charity scholarships.