PA Tax Credit programs

EITC and OSTC Programs

The Commonwealth of Pennsylvania Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs provides tax credits to eligible businesses and/or individuals when they make a gift that provides tuition assistance in the form of scholarships to eligible students who live in Pennsylvania.

EITC and OSTC funding makes it possible for extraordinarily gifted students who come from disadvantaged socioeconomic backgrounds or who would otherwise be unable to afford a private school education to gain the full benefits of a Grayson education.

How does it work?

Individuals, couples, and/or businesses with a minimum PA tax liability of $3500 annually are eligible to participate. Tax credits are applied against the tax liability in the year you make a contribution to an approved scholarship organization like The Grayson School. The goal of these programs are to help companies and individuals support and promote the educational interests of the children of Pennsylvania.

How to Apply

To receive an application, please contact Liz Braun, Director of Development and Community Partnerships or by phone at 484-428-3241.

Your support is an investment in helping some of the brightest young minds flourish and thrive so that they can share their unique talents with the world. Thank you.

Frequently Asked Questions

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How does EITC/OSTC benefit The Grayson School and their students?

The Grayson School is committed to maintaining a diverse community across multiple dimensions, including socioeconomics. We believe that diversity and equity are essential aspects of providing an optimal education for gifted students. We  recognize that exceptional ability knows no boundaries, yet that inequitable access to resources may prevent gifted students from reaching their potential. Providing adequate and appropriate resources, and identifying and meeting the needs of all our students is central to our mission.

Scholarships are critical in helping us meet these commitments.  These programs provide needed funding for scholarships that are based on family financial need and make it possible for extraordinarily gifted students who might otherwise be unable to afford a private school education to gain the full benefits of a Grayson education.

What is the impact of EITC scholarship money for The Grayson School and our students?

As Pennsylvania provides no funding for gifted education, the EITC tax credit programs provide the necessary funding for these high ability children to receive the education they deserve. In the 2019-2020 school year, PA tax dollars directed to Grayson through the EITC program covered 70% of our financial aid scholarships.

Who is eligible to participate in these Tax Credit programs?

Individuals, couples, and/or businesses with a minimum PA tax liability of $3500 annually are eligible to participate.

Companies authorized to do business in Pennsylvania that are subject to one or more of the following taxes may apply:

  • Personal Income Tax (with PA tax liability above $3,500?)
  • Capital Stock/Foreign Franchise Tax
  • Corporate Net Income Tax
  • Bank Shares Tax
  • Title Insurance & Trust Company Shares Tax
  • Insurance Premium Tax (excluding surplus lines, unauthorized, domestic/foreign marine)
  • Mutual Thrift Tax
  • Malt Beverage Tax
  • Retaliatory Fees under section 212 of the Insurance Company Law of 1921
Are there any additional fees that I will have to pay?
No.  If your application is accepted you will need to make a donation to The Grayson School through the Central PA Scholarship Fund of at least $3500 all the way up to the full amount of your annual state taxes.  You do risk the chance of losing your credit if you choose an amount over your tax liability, so it’s important to make sure you have a clear understanding of your anticipated annual state taxes. When you file your taxes in the spring you will receive a refund of 90% of your donation from Pennsylvania and a federal charitable benefit based on any amount of your donation that was above your state tax liability.
This is not tax advice, consult a tax or financial professional for how this applies to you.
Do I need to earn a particular income to qualify?

This is based on tax liability, not income, therefore there each taxpayer’s situation will differ. An individual or couple filing jointly must have a state tax liability of $3,500 or more to participate. To see if you may qualify for 2019, you can find your PA tax liability on Form PA-40 Line 12 of your most recent tax return. These credits can be used on both individual and joint income tax returns if your individual or combined PA tax liability is $3,500 or more.

When and where do I submit my application/joinder?

Your application may be submitted at any time until December 1st, 2020 for the fall and April 1st in the spring. It’s helpful to submit your application as soon as possible, because tax credits will be distributed on a first come first served basis until the tax credits which have been awarded. Please submit your completed application to Liz Braun, Director of Development and Community Partnerships.

Do I reapply each year?

Each year you are asked to reinvest. If you fail to do so, your membership is terminated.

How do I indicate the school that is to receive my contribution?

On your application form note school of your choice in the space designated for “Name of School,” and indicate the tax credit amount for which you are applying in the place designated “Amount $.”

When will I receive documents to file with my income taxes?

Your Federal and State K-1 forms will arrive in February, 2021. The Federal K-1 will list your investment and Federal charitable contribution, which you deduct on Schedule A if you itemize. Your PA K- 1 will list your 90% PA tax credit, which will go on Payment line 23 OC for Other Credit on your PA-40.

Why must I commit to 2 years? Can I increase or decrease my tax credit donation the second year?
We work with Central Pennsylvania Scholarship Fund (CPSF), a Special Purpose Entity (SPE) recognized by the state to process these tax credit programs. Our SPE requires a two year commitment of at least $3500 per year in order for its members to receive a 90% tax credit (the State awards a 75% tax credit when you commit for only one year, or a 90% tax credit when you commit to two consecutive years). If unexpected circumstances occur that dictate your second year donation must be reduced from your original commitment, such as loss of job or reduction in tax liability, please contact the SPE manager. You may be able to increase your donation in the second year up to the amount of your PA tax liability.
How do I decide the amount to contribute in 2021 if I don’t yet know my tax liability for 2020?

If your income is consistent, you should be able to use the amount from your recent PA-40 Line 12.

This is not tax advice, consult a tax or financial professional for how this applies to you.
What percentage of my contribution goes to Central PA Scholarship Fund (CPSF) for administrative purposes?

100% of your contribution goes to student tuition at The Grayson School. No portion of your donation is used for administrative purposes.