Q: Why are tax credits more attractive than a standard charitable donation?
A: 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.

Q: What businesses qualify to participate in the EITC?
A: Any business that pays any of the following Pennsylvania taxes: Corporate Net Income Tax, Capital Stock and Franchise Tax, Bank and Trust Company Shares Tax, Title Insurance Companies Shares Tax, Insurance Premiums Tax, Mutual Thrift Institutions Tax and Personal Income Tax Liability Tax.

Q: How much of a tax credit can I get for my business?
A: The tax credit is a 75% credit (against taxes owed) under the EITC. However, if a company makes the same commitment for two consecutive years, the credit becomes 90%. Existing charitable deductions still apply with this credit, increasing the value of the tax credit. Eligible companies may take up to $300,000 in tax credits per year.

Q: What scholarship and educational improvement organizations can businesses contribute to in order to receive the credit?
A: Organizations eligible to receive EITC contributions must be a recognized 501(c)(3) and distribute at least 80% of their annual receipts to eligible students or to innovative programs. Visit the REACH website, www.paschoolchoice.org, for a full list of organizations eligible to receive EITC funds.

Q: Can businesses contribute to more than one scholarship or educational improvement organization?
A: Yes. Businesses can donate to as many organizations as they choose. They may also donate to a scholarship and an educational improvement organization at the same time.

Q: Can my business receive a $300,000 credit for the EITC and a $150,000 tax credit for the pre-K EITC at the same time?
A: Yes. As long as the company has the tax liability, they can receive both tax credits in the same fiscal year.

Q: What is the process for businesses to receive the tax credit?
A: Businesses send DCED an application [307K PDF] for the tax credit. If there are funds available and the company does not owe back taxes, DCED will send an approval letter to the applicant. The company then has 60 days to make its donation(s) and 90 days to send proof of the donation(s) to DCED.