EITC

Educational Improvement Tax Credit

FAQs

What is the EITC program?

Through Pennsylvania’s Educational Improvement Tax Credit (EITC), individuals and businesses obtain a state tax credit (rather than deductions) covering 90% of Pennsylvania state tax debt via qualified donations. Such funding must target a non-profit entity that either: Offers tuition grants to scholars from impoverished families, or Is registered with the State as a certified educational improvement organization (“EIO”) due to delivering creative education programs to K-12 students in Pennsylvania.

  • Tax Credits directly reduce your tax liability on a dollar-for-dollar basis. For example, a $1,000 credit lowers your tax bill by $1,000.
  • Tax Deductions, on the other hand, lower your taxable income based on your tax bracket. For example, if you are in the 35% tax bracket, a $1,000 deduction reduces your tax bill by $350.
  • The EITC credit is equal to 90% of the donor’s contribution. Example: A $10,000 donation yields a $9,000 credit.

Yes.  Individuals can participate by joining a Special Purpose Entity (“SPE”) which distributes tax credits to individuals.  A SPE is a limited liability company that exists solely for the purpose of obtaining tax credits in the EITC program. Individuals sign a joinder agreement and members affidavit to make their contribution to the SPE.

Our SPE’s do not take an administrative fee. Therefore, 100% of your contribution goes to the school of your choice for scholarship purposes.

Participants join a special purpose entity that has been awarded credits. To join, we ask the donor to sign an agreement called a joinder. Within that agreement, the donor decides to what private school or Scholarship Organization the donor wishes to support.  Donors interested in joining should contact swashington@cgmphilly.com and ask for the joinder agreement.

Participation requires a minimum donation of $1,000.

Agreements are available by contacting swashington@cgmphilly.com.

On your joinder agreement you will identify the school or charity of your choice.

By March of the following year, we will send you a state and federal K-1 form. The state K-1 will report the state tax credit and the federal K-1 will report a federal deduction. Your Pennsylvania K-1 will list your 90% PA tax credit, which will go on Payment line 23 OC for Other Credit on your PA-40. The federal deduction will be reported on Schedule A of the Form 1040 if you itemize.  If you do not itemize, then you would report the standard deduction which is an amount established by Congress. In some instances, you may be able to take a 100% federal deduction. We recommend that you consult your tax advisor.

Contributors

Scholarship Organizations

  • Community Partnership School
  • Hope Partnership for Education
  • Media Providence Friends School Inc
  • Mercy Career and Technical High School
  • Merion Mercy Academy
  • Saint Joseph’s Preparatory School
  • Silverback Educational Foundation for the Arts, Dance & Athletics
  • Springside Chestnut Hill Academy
  • The Baldwin School
  • The Gesu School
  • The Meadowbrook School
  • Waldron Mercy Academy

Financial Institutions

  • First Citizens Community Bank
  • First Resource Bank
  • Fulton Bank
  • Truist Bank