Community Giving and Pennsylvania Tax Credits – A Win-Win Combination

A new year is full of opportunities, and we would like to remind you of a great tax friendly opportunity right in your own backyard. The Pennsylvania tax credit program is a wonderful way to give back to the community and in turn receive a Pennsylvania tax credit for your contribution. Tax credits can be used to offset Premiums Tax, Franchise Tax, Corporate Income Tax, Shares Tax, and Mutual Thrift Institutions Tax.

Following are a few credits for you to consider:

Opportunity Scholarship Tax Credit Program (OSTC) – This program provides tax credits to eligible businesses contributing to an Opportunity Scholarship Organization. Business contributions are used to provide tuition assistance in the form of scholarships to eligible students residing within the boundaries of a low-achieving school. The scholarships allow the students to attend another public school outside of their district. A business can be approved for a tax credit equal to 75% of its contribution for a one-year commitment or 90% of its contribution for a two-year commitment. This credit cannot be sold or assigned. A list of approved organizations can be found at www.newPA.com/OSTC.

Educational Improvement Tax Credit Program (EITC) – Tax credits may be awarded to operating businesses that make contributions to Scholarship Organizations, Educational Improvement Organizations, and/or Pre-K Scholarship Organizations. Contributions under this program are not limited to low-achieving school districts. EITC contributions can be awarded regardless of the school district boundaries. A business can be approved for a tax credit equal to 75% of its contribution for a one-year commitment or 90% of its contribution for a two-year commitment. This credit cannot be sold or assigned.

Neighborhood Assistance Program – This program offers ways for businesses to help nonprofits meet the challenges of funding. The business provides the nonprofit with a commitment letter. Tax credits are applied for by the nonprofit, and if approved, the contributing business would receive a state tax credit for their contribution. There are several programs under the Neighborhood Assistance Program. Following are two that may be of interest:

  • Neighborhood Assistance – Supports organization working to improve distressed communities – One year commitment to a project, up to 55% tax credit.
  • Charitable Food Program – Supports local food bank distribution centers – One year commitment, up to 55% tax credit.

Additional information can be found at www.newpa.com/community/community-services/neighborhood-assistance-program. Pennsylvania tax credits are a great way for your organization to give back to the community in a uniquely efficient way. Visit the PA Department of Community & Economic Development’s website for a complete list of available credits.