Pennsylvania Tax Credits
Programs and Eligibility
The Education Improvement Tax Credit, Opportunity Scholarship Tax Credit and the Pre-Kindergarten Tax Credit (EITC/OSTC/PKTC) were created by the Commonwealth of Pennsylvania as a means to giving contributions to Scholarship, Educational Improvement and/or Pre-K Scholarship organizations. The programs are administered by the Department of Community and Economic Development.
Businesses and individuals donating to the scholarship fund will receive a tax credit to offset up to 90% of the donation. Through the EITC, OSTC and PKTC programs, a business or individual can receive a dollar-for-dollar tax credit for up to 90% of a donation to help a low-income student attend a Friends school. Combined with federal tax savings, the out-of-pocket costs can be little or nothing. This is a first-come, first-served program.
Taxes eligible for EITC, OSTC and PKTC credits include:
• Personal PA income tax of employees, shareholders, or partners of corporations or partnerships
• Pennsylvania Corporate Net Income Tax
• Capital stock / franchise tax
• Bank and trust company shares tax
• Title insurance companies shares tax
• Insurance premiums tax
• Mutual thrift institutions tax
EDUCATIONAL IMPROVEMENT TAX CREDIT (EITC)
The Pennsylvania legislature enacted and launched the Educational Improvement Tax Credit Program in 2001. The program offers corporations tax credits for donating to organizations that provide low- and middle-income families private school and prekindergarten scholarships, as well as organizations that support innovative public school programs. These programs allow members to receive up to a 90% tax credit against their personal Pennsylvania state tax liability.
OPPORTUNITY SCHOLARSHIP TAX CREDIT (OSTC)
The Pennsylvania legislature enacted and launched the Opportunity Scholarship Tax Credit Program in 2012-13. The OSTC program provides funding to organizations to distribute in the form of scholarship awards to eligible students and families residing within the attendance boundary of a low-achieving public school. The scholarship awards allow eligible students to attend a private school or public school outside of their district of residence.
PRE-KINDERGARTEN SCHOLARSHIP TAX CREDIT (PKTC)
Contributions to a Pre-Kindergarten Scholarship program that provide tuition to programs of instruction for students between the ages of three to six years old that utilizes a curriculum of the school.