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​Pennsylvania Educational Improvement Tax Credit Program

What is the Educational Improvement Tax Credit and Opportunity Scholarship Tax Credit?
The Educational Improvement Tax Credit (EITC) provides companies with a 75% tax credit for donations to a non-profit scholarship or educational improvement organization.  The tax credit increases to 90% if the company commits to making the same donations for two consecutive years.  A business paying taxes in Pennsylvania can receive up to $750,000 in tax credits annually.  More importantly, the EITC provides children and families with a choice in their education and a chance in life.
 
The scholarships are for privately run schools that are registered with the Pennsylvania Department of Community and Economic Development to be involved in the program. The scholarships are then restricted to families whose household income is below $96,676 with an additional $17,017 allowance per child and dependent members of the household. (i.e. A family with 3 children cannot exceed $147,727 in household income.)
 
What types of taxes can be offset by this credit?
A business must be subject to one of the following seven Pennsylvania business taxes to participate:
  1. Corporate Net Income Tax
  2. Capital Stock Franchise Tax
  3. Personal Income Tax of S Corporation Shareholders, or partners in a limited or general partnership
  4. Bank and Trust Company Shares Tax
  5. Insurance Premiums Tax
  6. Mutual Thrift Institutions Tax
  7. Title Insurance Companies Shares Tax

Can I see an example of how the credit works?
Sample Calculation for LLC, Partnership or S-Corporation (2 year commitment):

Cash to Charity
$10,000
PA Tax Credit (90% of contribution)
(9,000)
Net Federal Tax Reduction for contribution
(37% tax rate)
(370)*
Out of Pocket
 $ 630

*($10,000-9,000*37%) Additional savings if taxpayer is in AMT
 
This business owner redirected $9,370 from Harrisburg to a local scholarship organization.
 
Visit the Pennsylvania Department of Community & Economic Development website which will provide you with an overview, application timeline and guidelines. 
For more information, please contact:

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Brian Gallagher, MT, CPA
Managing Member
P: 484.395.2201
F: 610.975.9132
BrianG@gmssurgent.com
PA EITC OVERVIEW

HISTORIC TAX CREDITS

 

Contact GMS Surgent

DEVON OFFICE
237 W. Lancaster Avenue
Suite 1000
Devon, PA 19333

PHILADELPHIA OFFICE
1608 Walnut Street
12th Floor
Philadelphia, PA 19103

P: 610.975.9122
F: 610.975.9132
E: info@gmssurgent.com

 
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237 W. Lancaster Avenue, Suite 1000   |   Devon, PA 19333   |   610.975.9122 
Picture
  • Home
  • Who We Are
    • Partners >
      • John Surgent
      • Brian J Gallagher
      • Lauren Adamski
      • Richard Pritz
      • Brian Pugliese
      • Lori Toonder
    • Partner Emeritus >
      • William J Schalleur
      • Joseph Mcdevitt
    • Director & Managers >
      • Everett Minger
      • Terri Devine
      • Stephanie Sommers
    • Firm Culture
  • What We Do
    • Accounting and Assurance >
      • Agreed Upon Procedures
      • Green-E Energy
      • Employee Benefit Plans
    • Business Advisory Services >
      • Profitability Analysis
      • Business Valuation
      • Bankruptcy - Insolvency
      • Litigation Support
      • Strategic Planning
    • Individual Advisory Services
    • Tax Strategies and Compliance >
      • PA EITC Overview >
        • PA EITC Step by Step
      • Historic Tax Credits
    • Technology Solutions
  • Who We Serve
    • Real Estate
    • Construction
    • Emerging Technology
    • Life Sciences
    • MFG and Distribution
    • Preferred Individuals
    • Private Equity and VG
    • Professional Services Firm
    • Retail and Consumer Goods
    • Trusts and Estates
    • Non-Profit Organizations
  • Employment
    • Opportunities
    • You and GMS Surgent
  • Resources
    • Client Alerts
    • Firm Newsroom
    • Useful Links and Tools
  • PAY MY BILL