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.
 

Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) are programs that allow individuals and business to redirect their PA state tax dollars to support tuition assistance. EITC provides financial aid to students who qualify based on household income guidelines. OSTC provides tuition assistance to students who qualify based on household income guidelines and live in a Pennsylvania school district that ranks in the bottom 15% of the state. 

Benchmark School typically enrolls less than 10 students each year who qualify to receive OSTC dollars. The OSTC program is also further restrictive as we can only award up to $15,000 per qualified student, and because these are our families who are most in need, we need to make up the difference. EITC dollars are limited only by financial need and tuition.

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. In most cases, we require a minimum contribution of $5000 to participate in the program. 

Tax credits are usually awarded to special entities in mid-October. Your application may be submitted at any time after that, as long as there are credits available. 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.

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.

Benchmark School receives the funds directly from our partner SPEs early in the following year, typically in January or February.

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.