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. Learn more about this program’s funding, eligibility, and regulations on this page.
Pennsylvania offers tax credits for corporate contributions to the following nonprofit organizations: Scholarship Organizations (SOs), which provide private school scholarships; Educational Improvement Organizations (EIOs), which support innovative programs in public schools; or prekindergarten scholarship organizations (PKSOs).
Scholarship amounts are determined by SOs. Tax credits are worth 75 percent of the contribution; however, a 90 percent credit can be claimed if the corporation commits to two consecutive annual contributions. In either case, the maximum tax credit is $750,000 per company; however, this cap will be lifted from October 1 through November 30 if credits go unclaimed. Credits are awarded to companies on a first-come, first-served basis until the$100 million cap is reached.
In 2014, the Pennsylvania legislature passed a bill allowing business firms to apply for an alternative tax credit if the preferred credit is unavailable; i.e., a corporate donor may elect to donate to the Educational Improvement Tax Credit Program (EITC) and simultaneously apply for an alternate tax credit through the Opportunity Scholarship Tax Credit Program (OSTC), a separate tax-credit scholarship program low-income students in “low-achieving” school zones.
Children are eligible for scholarships if their household incomes are less than $75,000 plus $15,000 for each child in the family. For example, a family with one child must have an income below $90,000, whereas a family with three children must have an income below $120,000. The figures will increase in future years to account for inflation.
72 P.S. §§ 8701-F through 8708-F and 9902E
No legal challenges have been filed against the program.