Educational Tax Credits (EITC)
FACT SHEET
WHAT DOES THIS MEAN FOR YOU?
HB 996, the Educational Improvement Tax Credit (EITC), provides companies who contribute to Pre-Kindergarten Scholarship Organization a business tax credit equal to 100% of the first $10,000 contributed and up to 90% of the remaining amount contributed up to a maximum credit of $150,000 annually.
Companies can get a 75% tax credit for donations to a non-profit scholarship or educational improvement organization. The tax credit increases to 90% if the company commits to making the same donations for two consecutive years. A business paying taxes in Pennsylvania can receive up to $300,000 in tax credits annually. More importantly, the EITC provides children and families with a choice in their education and a chance in life.
WHAT PROGRAMS CAN YOU RECEIVE TAX CREDITS FOR?
- Scholarship Organizationsprovide scholarships to children to attend the schools of their choice.
- Educational Improvement Organizations fund innovative programs in public schools across the Commonwealth.
- Pre-K Scholarship Organizationsfund scholarshipsto children sofamilies have the ability tochoose thepre-K that best fits the needs of their child.
Businesses authorized to do business in Pennsylvania who are subject to one or more of the following taxes are eligible to participate:
- Subchapter S corporations and other business entities that pay their State business taxes under the personal income tax on PA business income
- Corporate Net Income Tax
- Capital Stock franchise Tax
- Bank and Trust Company Shares Tax
- Title Insurance Companies Shares Tax
- Insurance Premiums Tax
- Mutual Thrift Institution Tax
- Personal Income Tax of S Corporation shareholders or Partnership partners
The business tax cap is $300,000 for businesses contributing to scholarship organizations and educational improvement organizations (In previous years, businesses contributing to the EITC have not been able to contribute over $200,000)
The business tax cap is $150,000 for businesses contributing to pre-K scholarship organizations (In previous years, businesses contributing to the EITC have not been able to contribute over $100,000)
HOW DOES EITC WORK?
Uses:
Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made.
Funding:
Tax credits equal to 75% of its contribution up to a maximum of $300,000 per taxable year; Can be increased to 90% of the contribution, if business agrees to provide same amount for two consecutive tax years.
Terms:
An approved company must provide proof to DCED within 90 days of the notification letter that the contribution was made within 60 days of the notification letter; Tax credits not used in the tax year the contribution was made may not be carried forward or carried back and is not refundable or transferable. Applications are approved on a first-come-first-serve basis by the date received.
A Great Way for Businesses to Direct TheirTax Dollars
The EITC has accomplished what many in Pennsylvania have been advocating for years: to get the business community more involved in education. The EITC enables companies to support local non-profit charities, at minimal cost, instead of sending their tax dollars to Harrisburg. It's that simple.
The business community has overwhelmingly responded the challenge. To date, over 3,600 companies have pledged in excess of $350 million dollars to the programs. The children of Pennsylvania thank you!
Where to Apply:
DCED Center for Business Financing
Tax Credit Division, 4th Floor
CommonwealthKeystoneBuilding
400 North Street, Harrisburg, PA17120
(717)-787-7120
Applications are approved on a first-come-first-served basis by date received.