PA Tax Credit Programs
Make your tax dollars work for Germantown Friends School
Businesses, corporations, and individuals can support Germantown Friends School through tax credit programs. Please consult your tax advisor and call the GFS Advancement Office at 215-951-2340 for more information.
Pennsylvania Educational Improvement Tax Credit Program (EITC)
The Commonwealth of Pennsylvania offers a unique opportunity for businesses in the state to reduce tax liability by contributing to registered scholarship organizations. Gifts to scholarships at Germantown Friends School can generate a tax credit equal to 75% of the contribution. Two-year commitments receive a 90% tax reduction.
The Pennsylvania Educational Improvement Tax Credit (EITC) program allows businesses to receive a tax credit for charitable contributions made to a qualifying educational organization. Eligible businesses include any company (including partnerships, single-member LLC’s, multi-member LLC’s and S-corporations) authorized to do business in Pennsylvania that is subject to the following:
- Personal Income Tax
- Capital Stock/Foreign Franchise Tax
- Corporate Net Income Tax
- Bank Shares Tax
- Title Insurance & Trust Company Shares Tax
- Insurance Premiums Tax
- Mutual Thrift Tax
- Malt Beverage Tax
The state tax benefit that a business receives varies based on the number of years the business pledges to make the contribution. The tax credits awarded to a business that makes a one-time contribution is 75% of the total contribution, up to a maximum of $750,000 per taxable year. If a business agrees at the time of its application to make a contribution for two consecutive years, the amount of the tax credit is increased to 90% of the contributions, up to a maximum of $750,000 per taxable year. Tax credits can be applied to any type of PA tax liability and are considered effective on the first day of the taxable year in which the contribution is made. Married taxpayers may file a joint PA tax return and apply the EITC credit to the couple’s joint tax liability.
The charitable contribution made in connection with the EITC program does not affect the treatment of the donation for federal income tax purposes. The business can deduct the payment on its federal income tax return if it qualifies as a charitable contribution as defined in the Internal Revenue Code. In the case of a pass-through entity (i.e. partnership or S-corporation) or SPE, the contribution would pass through to the owner’s individual income tax return as an itemized deduction.
Note: The program requires approval from PA lawmakers on a yearly basis in conjunction with the passage of the state budget and has been running since its inception in 2001.
Pennsylvania Opportunity Scholarship Tax Credit Program (OSTC, formerly known as EITC 2.0)
Due to the high demand for EITC tax credits, the Commonwealth of Pennsylvania created a similar program in 2012. Like EITC, the OSTC program provides tax credits to eligible businesses contributing to an Opportunity Scholarship Organization. Business contributions are then used to provide tuition assistance in the form of scholarships to eligible students residing within the boundaries of a low-achieving school to attend Germantown Friends School. A low-achieving school is defined as a public elementary or secondary school ranking in the bottom 15 percent of their designation as an elementary or secondary school based upon combined math and reading Pennsylvania System of School Assessment (PSSA) scores.
Friends Education Equity Collaborative (FEEC)
Thanks to a Special Purpose Entity created in 2016 called the Friends Education Equity Collaborative, qualified individual investors now have the opportunity to take advantage of tax credits for supporting qualified scholarship organization like Germantown Friends School. Learn more about FEEC.
- What is the time for applying for EITC and OSTC?
- Is my business eligible for EITC and OSTC?
- How can my business register?
- Who do I contact with questions?
- Important Additional Information
If your business is authorized to operate in Pennsylvania and pays one of the following taxes, you can register to be eligible for the Pennsylvania Educational Improvement Tax Credit Program (EITC) and the Pennsylvania Opportunity Tax Credit (OSTC).
- Corporate Net Income Tax
- Capital Stock Franchise Tax
- Bank and Trust Company Share Tax
- Title Insurance Companies Share Tax
- Insurance Premiums Tax
- Mutual Thrift Institutions Tax
- Personal Tax of S corporation shareholders or Partnership partners
The single application is now available online from the Pennsylvania Department of Community and Economic Development. This document provides further information on the program as well as guidelines for filling out the application form. Additionally, you can call the Advancement Office for guidance at 215-951-2340.
Pennsylvania businesses can apply for Opportunity Scholarship Tax Credits through DCED’s electronic single application system. The business application guide, found here explains the process of applying. Additionally, you can call the Advancement Office for guidance at 215-951-2340.
Tax credit applications for both programs will be processed on a first-come, first-served basis by day submitted, so please submit your application on the first day your business is eligible. All applications received on a specific day will be processed on a random basis before moving on to the next day's applications. Applications will be approved until the amount of available tax credits is exhausted.
At Germantown Friends School, contact the Advancement Office for guidance at 215-951-2340. At the Department of Community and Economic Development (DCED), call 717-787-7120 or find more information online at dced.pa.gov.
Once a business is eligible, the business has sixty (60) days to make its contribution to Germantown Friends School. An approved company must provide proof to DCED within 90 days of the notification letter that the contribution was made within 60 days of the notification letter; Tax credits not used in the tax year the contribution was made may not be carried forward or carried back and is not refundable or transferable.