PA Tax Credit Programs

Tax credits directly reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your tax bill by $1,000. The EITC credit is equal to 90% of the donor’s donation, e.g., a $10,000 donation yields a $9,000 credit. Deductions, on the other hand, reduce how much of your income is subject to taxes. Deductions lower your taxable income by the percentage of your highest federal income tax bracket. If you fall into the 35% tax bracket, a $1,000 deduction saves you $350.
 

To participate, the applicant must be a shareholder, partner, member or employee of a “business firm,” which is an entity authorized to do business in Pennsylvania. Participants may not be delinquent with their Pennsylvania state tax liabilities.

We ask that participants make a two-year commitment to the program. Individuals, who advise us that they may not be able to participate in year two, may withdraw at the discretion of the SPE. Likewise, individuals and businesses with a large one-time event are eligible to participate at our discretion.

No, only one family member per household should enroll and that individual must be affiliated with a Pennsylvania business firm. Both spouses’ tax liability may be offset with a credit on a joint return.

Yes. Individuals may adjust their withholding for the year. All participants are advised to seek advice from a tax professional.

To maximize the leveraged nature of the program, individuals and businesses should participate in an amount equal to about 110% of their state tax liability. This program is based on the applicant’s Pennsylvania tax liability (or joint tax liability), not income, therefore each taxpayer’s situation will differ. PA tax liability is reported on Form PA-40 Line 12. These credits are not refundable. That means if someone gives more than 110% of their state tax liability, they will not receive a tax benefit for any amount that exceeds the 110% threshold.

This program is based on the applicant’s Pennsylvania tax liability (or joint tax liability), not income, therefore each taxpayer’s situation will differ. As a rule of thumb, most of our members have household income of at least $200,000. All participants should consult with their professional tax advisor before participating.

Contact Lauren Ainsworth in Benchmark’s Development Office at 610-565-3741 x149 to be connected with a SPE that has enough tax credits to accept your donation. You will then fill out an application and if accepted (which is based on timing and availability of credits), you will submit a joinder agreement with your payment.

Your application may be submitted at any time during the year. Tax credits will be distributed on a first come first served basis until the tax credits which have been awarded to by the Department of Community and Economic Development are depleted. An application is not accepted for membership until the paperwork is completed and payment is received.

On your application you will identify Benchmark School as the school to which you’d like your funds directed. Benchmark cannot receive the funds until the SPE receives its approval from the state.

In February, your Federal and State K-1 forms will arrive. The Federal K-1 will list your participation and Federal charitable contribution, which you deduct on Schedule A if you itemize. Your Pennsylvania K- 1 will list your 90% PA tax credit, which will go on Payment line 23 OC for Other Credit on your PA-40.