Educational Tax Credit Program Expanded

As part of the final budget legislation passed last week, House Bill 1606 increases the amount of tax credits available in the Educational Improvement Tax Credit (EITC) program by $25 million, providing a total of $175 million in both the EITC and Opportunity Scholarship Tax Credit (OSTC) programs. The EITC program provides tax credits to businesses which make contributions to scholarship organizations (SOs) offering scholarships to children in kindergarten through grade 12, educational improvement organizations (EIOs) providing funding for innovative educational programs in public schools, and pre-kindergarten scholarship organizations (PKSOs) offering scholarships to children enrolled in pre-kindergarten programs.

The Chamber’s Foundation has utilized tax credits from local employers to fund scholarships to Pennsylvania Free Enterprise Week, the Tech Theatre program in local high schools, and other programs. Local early child development programs and private schools have also received funding from participating businesses. The new tax credits are allocated in the same proportions as outlined in the previous law. Scholarship organization credits increase by $15 million to $75 million.  Educational improvement organization credits increase by $7.5 million to $37.5 million. Pre-kindergarten scholarship organization credits increase by $2.5 million to $12.5 million. The OSTC program, which was established in 2012 based on the model of the EITC program, provides tax credits to businesses which make contributions to opportunity scholarship organizations (OSOs) offering scholarships to children in kindergarten through grade 12 who reside within the attendance boundaries of “low-achieving schools” (those schools in the lowest 15 percent of their designation as an elementary or secondary school).

The OSTC program also directs scholarships toward low-income families by requiring OSOs to give preference to applicants whose household income is within 185 percent of the federal poverty level.   Additional information on these programs is available on the PA Department of Community and Economic Development’s website.