Reading Education Foundation
EITC Income Program
Educational Improvement Tax Credit (EITC) Program
The Reading Education Foundation(REF) participates as an Educational Improvement Organization (EIO) in the Commonwealth of Pennsylvania’s EITC program. An EIO is a non-profit organization approved by DCED for participation in the EITC (EITC) program. To become an EIO, the non-profit must demonstrate to the DCED how its programs improve educational opportunities for children.
The EITC program offers substantial tax credits to eligible businesses that make financial contributions to approved organizations. Through EITC contributions, REF will receive funding to support the Total Experience Learning STEM Program for the Reading School District elementary and middle school students. This programming focuses on integrated Science, Technology, Engineering and Math concepts.
OVERVIEW
Tax credits to eligible businesses contributing to a Scholarship Organization, an Educational Improvement Organization, and/or a Pre-Kindergarten Scholarship Organization.
The Educational Improvement Tax Credit (EITC) Program authorizes tax credits (not deductions) for businesses that make contributions to Educational Improvement Organizations (EIOs) or scholarship organizations. The program is administered by the Pennsylvania Department of Community and Economic Development (DCED). The EITC Program enables companies to support nonprofit schools at minimal cost. Instead of sending tax dollars to Harrisburg, companies can re-allocate them to support the Reading Education Foundation.
WHY PARTICIPATE?
Businesses can significantly reduce their liability for Pennsylvania taxes while they support organizations, like the Wilson Education Foundation, which enhance educational opportunities for children. Additionally, by participating in the EITC program, an organization accrues the public relations benefits that occur whenever a company supports a worthy cause in the area where it does business. By supporting an education organization in which employees have a special interest, an employer can gain the appreciation of the people who make the business work.
BUSINESS APPLICATION GUIDELINE
Timing is critical! The program year runs July 1 – June 30. Please note: Applications that arrive at the DCED prior to July 1st will be disqualified. Applications for tax credits are processed by DCED on a first-come-first-served basis. It is very important that your application be filed on Day 1. Email or Fax are acceptable submission methods.
May 16 – Business applicants who have fulfilled their 2-year commitment and wish to reapply in FY 22/23 to renew their 2-year commitment. Note: this date is typically May 15 but has been adjusted this year until the next business day.
May 16 – Businesses who are in the middle of their 2-year commitment. Note: this date is typically May 15 but has been adjusted this year until the next business day.
July 1 – All other businesses including initial applicants and those applicants wishing to submit an additional application on top of their previously submitted 2-year commitment. Pass-through entities, such as S-Corporations, Partnerships, LLCs, etc., can now apply the same day as C-Corporations. Applications must be submitted electronically using DCED’s Single Application for Assistance. See the business application guide in the box above.
USES
Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made.
ELIGIBILITY
Businesses authorized to do business in Pennsylvania who are subject to one or more of the following taxes:
- Personal Income Tax
- Capital Stock/Foreign Franchise Tax
- Corporate Net Income Tax
- Bank Shares Tax
- Title Insurance & Trust Company Shares Tax
- Insurance Premium Tax (excluding unauthorized, domestic/foreign marine)
- Mutual Thrift Tax
- Malt Beverage Tax
- Surplus Lines Tax
FUNDING
Tax credits equal to 75 percent of its contribution up to a maximum of $750,000 per taxable year. Can be increased to 90 percent of the contribution, if business agrees to provide same amount for two consecutive tax years. For contributions to Pre-Kindergarten Scholarship Organizations, a business may receive a tax credit equal to 100 percent of the first $10,000 contributed and up to 90 percent of the remaining amount contributed up to a maximum credit of $200,000 annually.
From the point of view of our Educational Improvement Organization, a contribution of any amount is welcome. A large corporation may be able to contribute an amount that results in the maximum tax credit. A small business may contribute far less but the contribution may be a source of great pride for the business owner and employees. Each gift, no matter the size, helps a student to receive the education he or she needs to reach personal potential and take a fulfilling, rewarding place in society.
TERMS
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 are not refundable or transferable, except for an approved election by a pass-through entity to apply any unused tax credits to the tax liability of the owners in the taxable year immediately following the year in which the contribution is made.
WHEN DID THE EITC PROGRAM BEGIN?
On May 7, 2001, by an overwhelming bi-partisan majority, Pennsylvania made history by becoming the first state to pass an education tax credit aimed at businesses and corporations (HB 996). Now, effective retroactively to July 1, 2008, the definition of “business entity” has been expanded to include S Corporations and Partnerships which can receive up to $200,000 in tax credits annually. Most importantly, the EITC provides students and staff with additional opportunities that cannot be provided via the school district budget.
HOW TO APPLY
Businesses
Pennsylvania businesses can begin applying for EITC credits through DCED’s electronic single application system. DCED will no longer require applicants to mail the signed signature page.
The business application guide explains the process of applying. Tax credit applications will be processed on a first-come, first-served basis by day submitted. 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.
Organizations
Applicants interested in applying as an Educational Improvement Organization, Scholarship Organization or Pre-K Organization can apply at DCED Center for Business Financing, Tax Credit Division, 4th Floor, Commonwealth Keystone Building, 400 North Street, Harrisburg, PA 17120: 717.787.7120 or RA-EITC@pa.gov. Do not use the Single Application.
Applying is Simple!
- Business completes one-page application and submits it to the PA DCED.
- Business receives a letter of approval from DCED, and then chooses which EIOs to support.
- Business submits monetary contribution within 60 days to Wilson Education Foundation.
- WEF provides business with acknowledgment of contribution.
- Business submits acknowledgment to DCED.
- DCED communicates with PA Dept. of Revenue and applicable tax credit is applied to business tax account.
- Credit is taken as a payment of taxes on businesses’ annual tax return filing.
Additional Information
Educational Improvement Tax Credit Program (EITC) Frequently Asked Questions
Organizational Guidelines (.PDF)s
Scholarship Organization & Educational Improvement Organization
Pre-Kindergarten Scholarship Organization
If you have any questions about Pennsylvania’s EITC program, please contact: Gordon G. Hoodak – Reading Education Foundation (REF) Executive Director (484-258-7101 ext. 60118)