What are EITC and OSTC?
Through the Pennsylvania Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs, businesses and individuals (who become part of a Special Purpose Entity) can redirect their PA tax dollars to help provide academic scholarships for underserved students.
What is the tax credit available?
A one-time donation for K to 12 students can earn a 75% tax credit for a one-year commitment or a 90% credit for a two-year commitment. (Please note that individuals participating in a Special Purpose Entity through BLOCS are required to make a two-year commitment.)
What are the requirements for an individual to participate in a Special Purpose Entity through BLOCS?
- The individual must be an accredited investor who meets at least one of the following criteria:
- An individual with $235,000 or higher annual household income
- A couple with $300,000 or higher annual household income
- A person with $1 million in liquid assets
- The donor must have a PA state tax liability of $7,000 or higher
- The minimum requirement is a $7,000 contribution and a two-year commitment
- The donor must match the same contribution for the first and second year (Example: year 1 payment of $7,000 in 2018, and year 2 payment of $7,000 in 2019)
Which businesses are eligible to participate?
Businesses authorized to do business in Pennsylvania and who are subject to one or more of the following taxes may apply for EITC and OSTC:
- Corporate Net Income Tax
- Insurance Premiums Tax
- Capital Stock Franchise Tax
- Mutual Thrift Institution Tax
- Bank and Trust Company Shares Tax
- Title Insurance Company Shares Tax
- Personal Income Tax of S corporation shareholders or Partnership partners
Business Application Timeline:
- May 15 – Business applicants who have fulfilled their two-year commitment and wish to reapply in FY 19/20 to renew their two-year commitment.
- May 15 – Businesses who are in the middle of their two-year commitment.
- July 1 – All other businesses, including initial applicants and those applicants wishing to submit an additional application on top of their previously submitted two-year commitment.
Can a business or individual that receives a state tax credit through EITC or OSTC still take a charitable deduction for their donation on both their state and federal tax returns?
Yes. A business or individual that receives a state tax credit through the EITC/OSTC program may still take a charitable deduction for their gift on both their federal and state tax returns as allowed by law. This is in addition to the EITC and OSTC tax credits they will receive against their state tax liability. Please consult your tax advisor on specifics.
Please contact Nora McGeever, Director of Institutional Advancement, at 610-688-7610 x 149 or email@example.com