Pennsylvania

Educational Improvement Tax Credit Program

Pennsylvania provides tax credits for corporate contributions to the following nonprofit organizations: Scholarship Organizations (SOs), nonprofits that provide private school scholarships; Educational Improvement Organizations (EIOs), nonprofits that support innovative programs in public schools; or prekindergarten scholarship organizations (PKSOs). 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 (OSP), a separate tax-credit scholarship program for 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.  The program launched in 2001.  

Opportunity Scholarship Tax Credit Program  

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 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 (OSP) 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. 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).  Scholarship amounts are determined by SOs, 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 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.  This program launched in 2012.