The Educational Improvement Tax Credit Program (EITC) was enacted by the Pennsylvania Legislature in 2001. It enabled Pennsylvania to become the first state to pass an education tax credit aimed at corporations. The EITC program provides Pennsylvania companies with a tax credit of 75 percent for the first year and increases to 90 percent if the company commits to making the same donation(s) for two consecutive years to nonprofit scholarship or education improvement organizations.
A tax credit is a dollar-for-dollar reduction in the tax payment required for a business. The EITC is a tax credit of the amount of the donation made. The maximum amount of tax credits a business can claim is $750,000 for scholarship and educational improvement organizations and $200,000 for Pre-K scholarship organizations.
Businesses that can apply for tax credits are C-corporations, S-corporations and Pass-through entities. All businesses must apply online at the Pennsylvania state EITC page. Businesses applying for the first time can submit the application at the beginning of July each year. Businesses applying for year two of a two-year commitment may complete their application beginning May 15. Applications are processed by DCED (Department of Community and Economic Development) on a first-come, first served basis. A confirmation letter will be sent by DCED regarding the business' approval status.
Companies can claim the credit against corporate net income tax, capital stock and franchise tax, bank and trust company shares tax, title insurance companies shares tax, insurance premiums tax, mutual thrift institutions tax and personal income tax. For more information, please visit the state's EITC page.