Pennsylvania provides tax credits for corporate contributions to Scholarship Organizations (SOs) -nonprofits that provide private school scholarships, or Educational Improvement Organizations (EIO) -nonprofits that support innovative programs in public schools. Tax credits are worth 90 percent of the contribution; however, a 90 percent credit can be claimed if the corporation commits to two consecutive annual contributions. A two year commitment allows the business to apply on May 15 as an existing donor in future years. In either case, the maximum tax credit is $200,000 per company. A 100% credit is allowed on the first $10,000 of donation. Credits are awarded to companies on a first-come, first-served basis until the cap is reached. The total amount of tax credits is limited to $12.5 million. In 2014 due to a law change companies began passing thru EITC tax credits to individual donors in business entities called Special Purpose Entities (SPE's).
PROGRAM DETAILS- Student Funding:
Scholarship Organizations are able to determine scholarship amounts. A Pre-Kindergarten Program is a program of instruction for three-year-old to six-year-old students other than a kindergarten, operated by a school, or in conjunction with a school, located in the commonwealth of Pennsylvania that utilizes a curriculum aligned with the curriculum of the school with which it is affiliated, and which provides a minimum of two hours of instructional and developmental activities per day at least 60 days per school year. If a provider conducts a summer program it must offer a minimum of two hours of instructional and developmental activities per day for at least 20 days over the summer recess. A provider of a Pre-Kindergarten Program must demonstrate that it will operate an eligible program by receiving a letter from a school in which the school confirms that the curricular content and methods of instruction at the Pre-Kindergarten Program are consistent with those used at the school and that the Pre-Kindergarten Program has agreed to align its instructional and developmental activities so that its students would be prepared to enter the school’s kindergarten when and if they chose to do so. A copy of this letter must be submitted to the Department for each Pre-Kindergarten Program that the Pre-Kindergarten Scholarship Organizations want to provide scholarships for eligible children to attend.
Children are eligible for scholarships if their household incomes are not more than $90,000 plus $15,842 for each child in the family for 2019. For example, a family with one child must have an income below $105,842 whereas a family with three children must have an income below $137,526 The figures will increase in future years to adjust for inflation.
Rules & Regulations:
- Income Limit: $90,000 + $15,842/child
- Prior Year Public School Requirement: None
- Geographic Limit: Statewide
- Enrollment Cap: None
- Scholarship Cap: Full tuition
- Testing Mandates: None
- Credit Value: 90 percent (100% on first $10,000)
- Total Credit Cap: Yes
- Budget Cap: $12.5 million
Application information from the Pennsylvania Department of Community and Economic Development
Key features of the EITC:
90% tax credit for donors with 1 year or 2 year commitment
Tax credits are typically only available May 15 for existing donors and July 1 for new donors.