Educational Improvement Tax Credit (EITC)
The Educational Improvement Tax Credit (EITC) is a state program that allows eligible businesses to receive up to a 90% tax credit on contributions to an EITC scholarship organization. The tax credits to eligible businesses can contribute to a Scholarship Organization, an Educational Improvement Organization, and/or a Pre-Kindergarten Scholarship Organization. In 2014, Pennsylvania’s EITC legislation was amended to allow certain individuals (rather than only businesses) to participate in the EITC tax credit program through what is called a Special Purpose Entity (SPE).
Lancaster Mennonite School has an opportunity to fully fund our needs-based scholarship by maximizing this EITC capacity.
This is truly an amazing opportunity and we are very excited to see how God may use this program to help meet our financial needs this year and beyond. Please consult your own tax professional to ensure that the EITC/SPE program fits your personal situation.
Business Application Timeline
- May 15, 2020 – Business applicants who have fulfilled their 2-year commitment and wish to reapply in FY 18/19 to renew their 2-year commitment.
- May 15, 2020 – Businesses who are in the middle of their 2-year commitment.
- July 1, 2020 – 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. Paper business applications will no longer be accepted. See the business application guide above.
Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made.
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.
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 surplus lines, unauthorized, domestic/foreign marine)
- Mutual Thrift Tax
- Malt Beverage Tax or Retaliatory Fees under section 212 of the Insurance Company Law of 1921
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.
How to Apply
You will likely need the help of our CFO or CPA to complete this information for you.
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.
Once you have received your approval letter please complete the Designation Form and mail the form with your check to The Mennonite Foundation Inc. Please be aware you will also need to include a copy of your approval letter from the Department of Community and Economic Development (DCED) with this form.
If you would like to take advantage of this opportunity or if you have any questions, please contact Carrie Shreve, email@example.com, 717-740-2436.