Enacted 2012 • Launched 2012 • Tax-Credit Scholarship
Pennsylvania provides tax credits for corporate contributions to Scholarship Organizations (SOs),
nonprofits that provide private school scholarships. A company may claim a tax credit worth 75
percent of its contribution (90 percent if it commits to the same amount for two consecutive years).
Tax credits are available on a first-come, first-served basis. In 2012-13, the total tax credit is limited
to $400,000 per business; that limit rises to $750,000 in 2013-14 and is eliminated thereafter. The
total program is capped at $50 million. SOs also are required to give preference to students who
received scholarships the previous year, those eligible for free and reduced-price lunch (FRL), and
FRL students in certain school districts (a “first class” school district, a district with more than
7,500 students that receives an advance of its basic education subsidy, or a school district that has
both received an advance of its subsidy and is either in financial distress or is involved in a school
finance lawsuit against the state).
Latest Stats (2012-13)
- Students participating: n/a
- Schools participating: n/a
- Scholarship organizations: 111
- Average scholarship value: n/a
Maximum scholarship value as a percentage of
Pennsylvania’s total per-student spending ($12,729)
Scholarship Organizations determine the amount of the scholarships, which are capped at $8,500
for non-disabled students ($15,000 for students with disabilities), or the amount of tuition and fees,
whichever is less. Public school boards also are allowed to set up tuition grant programs that allow
students to attend a public or private school. For private schools under such programs, the tuition
grant is limited to the state’s per-pupil subsidy amount.
Students must live in a “low-achieving” school zone, with low-achieving defined as the state’s
bottom 15 percent of public schools based on standardized test scores. Also, children are eligible
only if their household incomes are under $60,000 plus $12,000 for each child in the family. After
June 30, 2013, those figures increase to $75,000 and $15,000, respectively. Income limitations
multiply for students with certain disabilities. Starting July 1, 2014, those levels increase to account
No legal challenges have been filed against the program.
Rules & Regulations
SOs and Educational Improvement Organizations (EIOs) must be nonprofit organizations incorporated in Pennsylvania. An SO must contribute at least 80 percent of its annual tax-credit donations to scholarships and submit annual reports on a wide range of information, including number of applications and scholarships, the total and average amount of scholarships, the number of scholarships (and average value) awarded to students eligible for the free and reduced-price lunch program, the organization’s federal Form 990, and a copy of financial audit statements. It may not restrict its scholarships to a single school.
Participating schools must comply with anti-discrimination laws. They are not allowed to charge higher tuition to scholarship students. Private schools cannot recruit scholarship students for athletic purposes. Transportation shall be provided and is reimbursable.
Public school districts are required to notify parents within low-achieving school zones that they are eligible for scholarships.
Private schools’ autonomy is protected by provisions barring the state from interfering with whether a private school is limited to a single gender, specializes in math or the arts, or offers particular grade levels. The state cannot require a private school to admit students if the private school does not have the appropriate programs or services to meet students’ special needs. Nor can the state regulate course content or admissions criteria of any religiously affiliated school.
Stephanie Linn | email@example.com
House Bill 761 (2012), which was an omnibus tax bill, included the new program starting on page 77. See http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2011&sessInd=0&billBody=H&billTyp=B&billNbr=0761&pn=3894.