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Pennsylvania – Educational Improvement Tax Credit Program


Pennsylvania – Educational Improvement Tax Credit Program

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.

Program Fast Facts

  • 34,826 scholarships awarded (2014–15)

  • 54 percent of families with children income-eligible statewide

  • 265 scholarship organizations awarding scholarships (2013–14)

  • Average scholarship value: $1,587 (2013–14)

  • Value as a percentage of public school per-student spending: 11 percent

Program Details

Pennsylvania’s Educational Improvement Tax Credit Program

Scholarships Awarded
School Year Ending

Click the + symbols to learn more about this program’s details.

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).

Student Funding

Scholarship amounts are determined by each approved organization. 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.

Student Eligibility

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.

Friedman Feedback

Pennsylvania’s tax-credit scholarship program has considerable room to grow on overall funding, as the cap on available tax credits is limited to $100 million. However, the income requirements in the program are among the most generous of the means-tested school choice programs. As for scholarship funding, the program gives SOs the opportunity to determine the size of scholarships distributed; however, that is somewhat meaningless given the cap on overall funding, which tends to incent SOs to give smaller scholarships. The program fares well on school regulations; there are no testing requirements or admissions requirements, and all private schools can qualify as long as they satisfy the state’s mandatory attendance requirements and obey the Civil Rights Act of 1964. Pennsylvania’s program should increase the overall cap on tax credits, which would allow scholarship sizes and student participation numbers to grow.

Rules and Regulations

  • Income Limit: $75,000 + $15,000 per child
  • Prior Year Public School Requirement: None
  • Geographic Limit: Statewide
  • Enrollment Cap: None
  • Scholarship Cap: Full tuition
  • Testing Mandates: None
  • Credit Value: 75 percent / 90 percent
  • Total Credit Cap: Yes
  • Budget Cap: $100 million


SO Requirements:

  • Use at least 80 percent of contributions for scholarships
  • Make scholarships available for more than one school
  • Submit annual report detailing donations received and scholarships awarded and proof of a financial review by a certified public accountant

Governing Statutes

72 P.S. §§ 8701-F through 8708-F and 9902E

Legal History

No legal challenges have been filed against the program.

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