Pennsylvania Educational Tax Credits

The Commonwealth’s Educational Improvement Tax Credits (EITC) and Opportunity Scholarship Tax Credits (OSTC) received significant funding increases in the recently passed budget legislation. The 2022-2023 budget increased total funding for the tax credit programs by $125 million. The increase includes an additional $88 million for scholarship organizations, $7 million for educational improvement organizations, $8 million for pre-kindergarten scholarship organizations and $10 million for the opportunity scholarship tax credit programs.

The popular tax credit programs offer tax credits of up to 90% (for a two-year commitment) of contributions made by businesses to approved organizations. New participants seeking entry into the tax credit programs have faced challenges in recent years due to the high demand for tax credits. The increased funding should allow more taxpayers to take advantage of the educational tax credits. The budget legislation also removes the limitation of the total amount of education tax credits a business can receive (currently $750,000) if all tax credits for scholarship organizations have not been awarded by November 30th. Taxpayers interested in Pennsylvania’s educational tax credits should note the credits are on a first-come, first-serve basis and early application is recommended.

For more information on educational tax credits, visit the Pennsylvania Department of Community and Economic Development website.

If you have questions on Pennsylvania’s EITC or OSTC programs or other SALT matters, please contact the HBK SALT Advisory Group at hbksalt@hbkcpa.com.