Educational Improvement Tax Credit (EITC)
EITC donations enrich the lives of thousands of K-12 Bucks County students
Understanding the Educational Improvement Tax Credit (EITC) Program
The EITC Program has accomplished what many in Pennsylvania have been advocating for years - a way for the business community to be directly involved in education. The EITC enables companies to support local nonprofit charities like the Bucks County Community College Foundation, at minimal cost, instead of sending their tax dollars to Harrisburg. It's simple!
- Since 2009, the Bucks County Community College Foundation has received more than $1 million in EITC contributions from local businesses.
- EITC donations support our K-12 programming including: High School Dual Enrollment, Summer Bridge Program, Kids on Campus Summer Camps, and the Artmobile.
The EITC Process
- Visit www.newpa.com/eitc to complete the business application.
- Fill out the application and submit it to DCED through the online single application.
- The business then receives a letter of approval from DCED for its participation in the program.
- The business must submit their monetary contribution within sixty (60) days to an approved organization.
- The Educational Improvement Organization (EIO) provides the business with an acknowledgement of the contribution.
- The business must submit this acknowledgement to DCED.
- DCED communicates with the Pennsylvania Department of Revenue and applicable credit is applied to the business tax account. A notice is provided.
- Credit is applied as if paid at the beginning of the tax year.
- The credit is taken as a payment of taxes on the businesses annual tax return filing.
- For pass-through entities (sole proprietorships, LLPs...) that are passing the credit to the business owners, the business must complete an irrevocable election form to be filed with the PA Department of Revenue by the due date, including extensions of the business' PA return.
- Credits distributed to a partner, member or shareholder can be applied not just to the income or the applicant, but also to a spouse who files a joint return with the applicant.
Deadlines
- May 15 – Business applicants who have fulfilled their 2-year commitment and wish to reapply in fiscal year 18-19 to renew their 2-year commitment.
- May 15 – Businesses who are in the middle of their 2-year commitment.
- July 2 – All other businesses including initial applicants.
Tax Savings
Businesses participating in the EITC Program can achieve tax savings in two ways:
- Credit against PA taxes
- Tax reduction is dollar for dollar against tax due.
- Credit is non-transferable and non-refundable.
- Deduction against net income as a charitable donation
- Tax reduction equals the contribution amount times tax rate of the applicable tax.
- Subject to rules governing deductibility of charitable contributions.
Business Can Claim the EITC Against PA Taxes
- Bank and Trust Company Shares Tax
- Capital Stock and Franchise Tax (this tax is scheduled to be eliminated)
- Corporate Net Income Tax
- Insurance Premiums Tax
- Mutual Thrift Institutions Tax
- Malt Beverage Tax
- Title Insurance Companies Share Tax
- Personal Income Tax of S Corporation Shareholders or Partnership Partners
Large partnerships and LLC's are able to create smaller subsidiary partnerships whose members can then participate in the EITC program.