Educational Improvement Tax Credit Program (EITC)
Mission for Educating Citizens with Autism, through its MECA Foundation, is now eligible to receive support as a Scholarship Foundation Organization through Pennsylvania’s Educational Improvement Tax Credit (EITC) program. The EITC program enables Pennsylvania-based businesses to receive generous tax credits by contributing to qualified organizations. MECA uses EITC contributions to help fund a wide variety of educational programs for students with autism.
Offering businesses an enormous tax break while funding exciting new programs for students with autism is a win-win situation. Business owners will be able to appreciate the fact that the EITC is NOT a tax deduction program – EITC is a tax credit program. The full amount of your tax credit is applied to your tax bill.
What Is the EITC Program?
Through Pennsylvania’s Educational Improvement Tax Credit (EITC) program, a qualified business can fund education rather than pay a percentage of its state taxes. To do this, the business makes a gift, through the EITC program, to an EITC-registered scholarship organization – like The MECA Foundation.
The state Department of Community and Economic Development (DCED) gives the business a tax credit equal to a percentage of the business’s contribution. DCED determines the eligibility of businesses, application procedures, application deadlines, and tax-credit limits.
The MECA Foundation is an EITC-registered scholarship organization. An EITC gift to the Foundation provides scholarships for students who attend one of our education programs.
Is Your Company Eligible?
A company is eligible to participate in EITC if the company pays any of these six taxes:
- Corporate Net Income Tax
- Capital Stock Franchise Tax
- Bank and Trust Company Shares Tax
- Title Insurance Companies Shares Tax
- Insurance Premiums Tax
- Mutual Thrift Institutions Tax
The Pennsylvania Department of Community and Economic Development determines the eligibility of businesses, scholarship organizations, and education improvement organizations.
How Does a Company Apply to Participate?
A company applies to participate by completing a one-page application form.
The complete business application can be downloaded here (PDF)
More information is available from the Department of Community and Economic Development (DCED) at (717) 787-7120.
What’s New in the EITC Program for 2008-2009?
The approval of the PA State Budget and School Code Bill for 2008-2009 FY brought about several major changes to the EITC:
- Subchapter S corporations and other business entities that pay their State business taxes under the personal income tax on PA business income can now fully participate in the Program
- The business tax cap is $300,000 for businesses contributing to scholarship organizations and educational improvement organizations (In previous years, businesses contributing to the EITC have not been able to contribute over $200,000)
- The business tax cap is $150,000 for businesses contributing to pre-K scholarship organizations (In previous years, businesses contributing to the EITC have not been able to contribute over $100,000)
How are the EITC Funds Divided?
$44,666,667 million is appropriated annually for scholarship organizations, $22,333,333 million for innovative educational improvement programs in public schools and $8,000,000 for a separate pre-kindergarten scholarship program.
During 2007-08, 44,000 children across Pennsylvania benefitted from EITC scholarships and from innovative programs – like the PAAL Program – that would have likely have gone unfunded.
When Should a Company Apply?
Whether your business is a new or a renewing EITC applicant, you should be aware that the Department of Community and Economic Development (DCED) allocates credits on a first-come, first-served basis. When the tax credits dispensed equal the total credits allocated for the year, DCED can offer no additional credits and businesses cannot contribute through EITC during that year.
DCED accepts applications beginning July 1 for that fiscal year (July 1 through June 30), and processes them on a first-come, first-served basis.
Once your business is approved, you have 60 days to make a contribution to The MECA Foundation.
How Can My Company Benefit?
By participating in the EITC program, an organization accrues the public relations benefits that occur whenever a company supports a worthy cause in the area where it does business. By supporting an education organization in which employees have a special interest, an employer can gain the appreciation of the people who make the business work.
A business that contributes through EITC to an EITC-registered organization in one year will receive a tax credit equal to 75% of the contribution. A company that agrees to contribute to the same scholarship organization for two consecutive years receives a tax credit equal to 90% of the contribution amount.
For More Information
To find out more about how, at little cost, your company can provide a lot of help to our students, please contact:
Tami Freaney
The MECA Foundation
(610) 873-6291
tfreaney@paalprogram.org