Education Improvement Tax Credit (EITC)

EITC donations enrich the lives of K-12 students in our region. 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. EITC enables companies to support local non-profit organizations like the Penn Highlands Community College Foundation instead of sending their tax dollars off to Harrisburg. This keeps the money local!

To discuss EITC options, please call 814.262.6499 or e-mail foundation@pennh.25comm.com.

EITC Process

1. Visit https://dced.pa.gov/programs/educational-improvement-tax-credit-program-eitc/ and complete the business application.
2. Fill out the application and submit it to DCED through the online single application.
3. The business then receives a letter of approval from DCED for its participation in the program.
4. The business must submit its monetary contribution within sixty (60) days to an approved organization.
5. The Educational Improvement Organization (EIO) provides the business with an acknowledgment of its contribution.
6. The business must submit this acknowledgment to DCED.
7. DCED communicates with the Pennsylvania Department of Revenue and applicable credit is applied to the business tax account. A notice is provided.
8. Credit is applied as if paid at the beginning of the tax year.
9. The credit is taken as a payment of taxes on the business’s annual tax return filing.
10. 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.
11. 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 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 on 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.

• 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. The application process is listed below.

• Tax Savings

  Businesses participating in the EITC Program can achieve tax savings in two ways:

  1. Credit against PA taxes
     • Tax reduction is dollar for dollar against tax due.
     • Credit is non-transferable and non-refundable.
  2. Deduction against net income as a charitable donation
     • Tax reduction equals the contribution amount times the tax rate of the applicable tax.
     • Subject to rules governing deductibility of charitable contributions.

• Claiming 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 LLCs are able to create smaller subsidiary partnerships whose members can then participate in the EITC program.