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What is EITC?
The Educational Improvement Tax Credit program (EITC) is a way for businesses to direct their tax funds toward private education of Pennsylvania’s students. Not only does this improve a student’s chance to receive an education at a school of their choice, but it also results in a tax credit for the business involved and the money stays in our community.
This program offered by the State of Pennsylvania provided a win-win benefit to those businesses that qualify. This is one of the few opportunities you will have to direct your tax dollars to a specific destination. Tax credits equal to 75% of its contribution up to a maximum of $750,000 per taxable year and can be increased to 90% of the contribution, if a business agrees to provide the same amount for two consecutive years.
INTRODUCTION of OSTC
- Due to the overwhelming popularity of the EITC Program, the State of Pennsylvania announced a new program in July 2012 called the Opportunity Scholarship Tax Credit (OSTC).
- The program provides tax credits to eligible businesses contributing to an Opportunity Scholarship Organization.
- Business contributions are then used by Opportunity Scholarship Organizations to provide tuition assistance in the form of scholarships to eligible students residing within the boundaries of a low-achieving school to attend another public school outside their district or non-public school.
- A low-achieving school is defined as a public elementary or secondary school ranking in the bottom 15% of their designation as an elementary or secondary school based upon combined math and reading PSSA scores.
- In 2013, our state allocated an additional $50 million for this program.
- Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made. the tax credits awarded to businesses will be equal to 75% of their contribution amount, which can be increased to 90% upon the business committing for two years. The total may not exceed $750,000 per taxable year.