Educational Improvement Tax Credit Program (EITC)

How your business and the Lancaster Family YMCA
can both benefit.

 

EITC Overview
EITC Tax credits are available to eligible businesses contributing to a Scholarship Organization, an Educational Improvement Organization, and/or a Pre-Kindergarten Scholarship Organization.

The Lancaster Family YMCA Early Learning Center is a
Pre-K Kindergarten Scholarship Organization that is an
approved EITC eligible organization.

Funds received from the EITC program will greatly assist us in meeting the need for quality early learning programs and ensuring that no child is turned away due to inability to pay.

 

What is the Benefit to Businesses?
Companies can effectively get a dollar-for-dollar reduction in the tax payment required for a business. The EITC is a tax credit of the amount of the donation made. Tax credits equal to 75 percent of its contribution up to a maximum of $750,000 per taxable year. This 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.

Why are tax credits more beneficial than a standard charitable donation?
While deductions reduce your amount of taxable income, tax credits reduce your actual tax bill, dollar-for-dollar. Tax credits are utilized AFTER your tax liability is established. 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 surplus lines, unauthorized, domestic/foreign marine)
  • Mutual Thrift Tax
  • Malt Beverage Tax
  • Retaliatory Fees under section 212 of the Insurance Company Law of 1921

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.

How to Apply
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.

Additional information can be found at  http://dced.pa.gov/programs/educational-improvement-tax-credit-program-eitc/