Pennsylvania Educational Improvement Tax Credit Program
EITC Frequently Asked Questions
What is the "Educational Improvement Tax Credit (“EITC”) Program?"
Officially known as Act 4 of 2001, this program amends the Pennsylvania Public School Code to authorize tax credits for businesses that make contributions to educational improvement organizations or scholarship organizations. Pennsylvania's Department of Community and Economic Development (“DCED”) administers the program.
What are "Educational Improvement Organizations?"
Educational Improvement Organizations (“EIO’s”) are non-profit organizations that have been approved by DCED for participation in the EITC program. To become an EIO, the non-profit must apply to the DCED to show how their programs improve the educational opportunities for children. The Upper Dublin Education Foundation (“UDEF”) has been designated as an eligible “Educational Improvement Organization.”
Who can participate?
Any business that pays Pennsylvania taxes—including Corporate Net Income Tax, Capital Stock Franchise Tax, Bank and Trust Company Shares Tax, Title Insurance Company Shares Tax, Insurance Premiums Tax, or Mutual Thrift Institutions Tax.
Why should businesses participate?
Businesses can significantly reduce their tax liability while they support organizations like UDEF that enhance the educational opportunities for children. Participation in the EITC program provides significant leverage to the contributions made by a corporation.
When does the tax credit program begin, and how much is available?
The program year is July 1 – June 30. In the past, a total of up to $14.5 million has been available for educational improvement organizations Applications for tax credits are processed until the tax credits are exhausted. In the past, only applications received on the first day were approved. The filing date for this year is July 1st, 2008.
How do businesses apply for the tax credit?
The
process is simple. Businesses must submit a brief application to the DCED
stating what amount they plan to contribute. The DCED will notify businesses
if their applications are approved. After receiving approval, businesses
have 60 days to make the contribution to one or more approved Educational
Improvement Organizations. The business must also send the DCED a copy of
the confirmation of contribution from the Educational Improvement
Organization(s) to which the contribution was made.
UDEF will assist all businesses interested in completing the application. We
also request that you submit the application to us. We will hand deliver all
applications to DCED on June 30th.
click to download the application
(Adobe PDF)
How many tax credits can a business apply for and how are they used?
Corporations can apply to have up to $200,000 in tax credits approved for donations. Corporations get a credit of 75 percent for one year donations and 90 percent credit for 2 year donations. Tax Credits may be applied against the tax liability of a business for the tax year in which the contribution was made. click for one-year and two-year tax credit examples
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