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Pennsylvania – Opportunity Scholarship Tax Credit Program


Pennsylvania – Opportunity Scholarship Tax Credit Program

Pennsylvania’s Opportunity Scholarship Tax Credit Program, enacted and launched in 2012, offers corporations tax credits for their donations to Opportunity Scholarship Organizations (OSOs) that provide private school scholarships. Students who meet the zoning and income requirements can receive those tax-credit scholarships. Learn more about the program, including funding, eligibility, and rules, on this page.

Program Fast Facts

  • 14,987 scholarships awarded (2014–15)

  • 7 percent of students eligible statewide

  • 173 scholarship organizations awarding scholarships (2013–14)

  • Average scholarship value: $2,312 (2013–14)

  • Value as a percentage of public school per-student spending: 17 percent

Program Details

Pennsylvania’s Opportunity Scholarship Tax Credit Program Participation

Scholarships Awarded
School Year Ending

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

Pennsylvania offers tax credits for corporate contributions to Scholarship Organizations (SOs), nonprofits that provide private school scholarships.

Student Funding

Scholarship amounts are determined by OSOs, 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.

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, and the maximum tax credit is $750,000 per company. 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 Opportunity Scholarship Tax Credit Program (OSTC) and simultaneously apply for an alternate tax credit through the Educational Improvement Tax Credit Program (EITC), Pennsylvania’s original tax-credit scholarship program. The total funding amount of tax credits is capped at $50 million.

Student Eligibility

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 less than $75,000 plus $15,000 for each child in the family. Income limitations multiply for students with certain disabilities. Those levels are allowed to increase to account for inflation.

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).

Friedman Feedback

Because of the myriad requirements needed to qualify for a scholarship—coupled with the overall funding cap—the chief weakness of Pennsylvania’s newer tax-credit scholarship program is its student eligibility. On school regulations, there are no testing requirements or admissions restrictions; schools simply must obey nondiscrimination laws. For this program to grow successfully, Pennsylvania should consider cutting some of the complexity and red tape placed on student eligibility.

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: $8,500 / $15,000 (special needs)
  • Testing Mandates: None
  • Credit Value: 75 percent / 90 percent
  • Total Credit Cap: Yes
  • Budget Cap: $50 million
  • *Limited to students in low-performing schools


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 to the state, including number of scholarships awarded and total and average amounts of scholarships awarded to students from households with a family income that does not exceed 185 percent of the federal poverty guideline ($44,863 for a family of four in 2015–16)
  • Submit a copy of a financial audit conducted by a certified accounting firm

Governing Statutes

72 P.S. §§ 8701-G.1 through 8712-G.1

Legal History

No legal challenges have been filed against the program.

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