Pennsylvania’s Educational Improvement Tax-Credit (EITC) program has allowed eligible individual taxpayers and businesses to lower their tax bills by donating to scholarship-granting organizations, private schools, EITC-eligible organizations, and other educational initiatives.
With this program, tax dollars turn into scholarships that can provide financial aid to children coming from underprivileged families to attend a private school of their choice. Suffice it to say, the Pennsylvania private school tax credit is enriching more educational opportunities for students who want to enjoy the full benefits of receiving private school education.
How does the Pennsylvania private school tuition tax-credit work?
If you are entitled to a Pennsylvania private school tuition tax-credit, you as a taxpayer will be given a sort of incentive that you can use to subtract it directly from the taxes you owe to the government. This is after you have donated to an EITC-eligible organization or private school.
Businesses can make up to $750,000 donation each year to scholarship granting organizations and can claim 75% of that donation as a credit. It can also increase to 90% if the business will commit to donating for two consecutive years.
Who benefits from the Pennsylvania Educational Improvement Tax-Credit (EITC) program?
On the surface, the EITC program looks like it deprives the state of some potential tax revenue, however, it is actually a beneficial program for businesses, students, and even the state.
The benefits of students are clear. Students coming from underprivileged families can get scholarships and pursue a private school education. Eligible families who want to find an alternative from a traditional public school can now provide a good option for their children. It gives students a fighting chance to receive the quality education they deserve.
For businesses, the Pennsylvania private school tax-credit program encourages them to stay in Pennsylvania to do their business. In fact, the emergence of tax-credit programs is one of the simplest ways to convince business owners to set up a shop in the state.
On the other hand, the EITC program benefits the state too. Other than the salaries of state employees who are overseeing the program, the state doesn’t have to spend anything on the EITC program. And even though the state sacrifices tax revenue that could have funded roads, schools, and other public services, the state gets a payoff in terms of education. Moreover, tax credit programs put pressure on policymakers to advocate for more educational opportunities in the community.
How can businesses apply for the Educational Improvement Tax-Credit program?
Eligible businesses can apply through Pennsylvania’s Department of Community and Economic Development’s (DCED) electronic single application system to start getting EITC credits.
The bottom line
The EITC program has opened new doors to many students and Pennsylvania’s business community. With this program, businesses can receive a tax-credit all the while contributing to the success of the program to open more educational opportunities in the community. And when these students graduate, those businesses that helped them now have an even more grand opportunity to hire educated and skilled workers in Pennsylvania.