Pennsylvania Tax Credit Programs

How to Support Watson Through PA Tax Credit Programs

Qualified businesses and individuals can support the mission of the Watson Institute through Pennsylvania’s tax credit program: Educational Improvement Tax Credit (EITC).

What is the EITC Program?

Through Pennsylvania’s Educational Improvement Tax Credit (EITC) program, qualified businesses and individuals can make donations to the Watson Institute and receive tax credits equal to a percentage of their gift.

The Watson Institute is an approved Educational Improvement Organization (EIO) and an approved Scholarship Organization (SO) in the EITC program. Gifts made to the EIO program enable Watson to provide community-based services to students with special needs in school districts throughout the region.

Gifts designated for SO allow Watson to offer scholarships for students with special needs whose home school districts fund their tuition in full. Programming for these students is not subsidized by state funds and thereby makes them eligible to receive support under the EITC scholarship guidelines.

What Kind of Tax Credit Can I Expect?

Tax credits equal 75% of a donor’s contribution up to a maximum of $750,000 per taxable year. The tax credit can be increased to 90% of the contribution if the donor commits to making the same donation for two consecutive years.

Who is Eligible to Participate in the Tax Credit Programs?

Businesses authorized to conduct business in Pennsylvania, and who are subject to one or more of the following taxes may be eligible for the EITC programs:

  • Personal Income Tax
  • Corporate Net Income Tax
  • Capital Stock / Foreign Franchise Tax
  • Bank Shares Tax
  • Title Insurance & Trust Company Shares Tax
  • Insurance Premiums Tax*
  • Mutual Thrift Institution Tax
  • Malt Beverage Tax
  • Retaliatory Fees under Section 212 of the Insurance Company Law of 1921

*excluding surplus lines, unauthorized, domestic/foreign marine

The Pennsylvania Department of Community and Economic Development determines the eligibility of businesses as well as educational improvement organizations.

Businesses Often Eligible to Participate:

  • S Corporations
  • C Corporations
  • General Partnerships
  • Limited Partnerships
  • Limited Liability Companies (LLC)

How do I apply to be a donor?

For eligible businesses, there are two methods through which you can participate as a donor in the EITC program.

  1. Businesses can complete an online application to apply for tax credits on the PA Department of Community and Economic Development’s (DCED) website.

    Both new and renewing EITC business participants receive approval on a first-come, first-served basis. When the tax credits given to organizations equal the maximum allowed to be credited for the year, the DCED will close the EITC opportunity until the following year.

    First-time applicants can apply starting on July 1. Renewing applicants may reapply on May 15.

    A business applying for credits through the DCED must make its donation to the charitable organization within 60 days of receiving approval for their tax credit and must provide proof that the donation was made within this window.

    The Watson Institute provides all EITC donors with an acknowledgment letter for this purpose. Reporting is made to the PA Department of Community and Economic Development (DCED).

  2. Businesses can use apply for credits to a Special Purpose Entity (SPE). As a donor, you will enter into a joinder agreement with a qualifying SPE and remit your donation to them.

    The SPE will then forward the funds to the Watson Institute. Learn more about Special Purpose Entities (SPE).

For eligible individuals, there is one option through which you can participate as a donor in the EITC program.

  1. Individuals who either work for or own a for-profit company in Pennsylvania, or have a tax of Married Filing Jointly with a spouse who works for or owns a for-profit company in Pennsylvania may be eligible to donate through an SPE to receive EITC tax credits.

    Please consult your tax advisor for questions regarding your specific tax status.

Review our step-by-step guide about the SPE Program.

What are the differences between applying directly through the state vs. working with an SPE?

Working directly with the Pennsylvania DCED requires donors to follow the application deadlines (Mid-May or early July as outlined above) set forth and to make their contributions within a specific time frame as mandated by the state (within 60 days of receiving approval for the tax credit).

SPEs offer more flexibility with timing but require a two-year minimum commitment. The maximum should not exceed your tax liability since the credits cannot be carried over.

SPEs are the only method through which individual donors can contribute to the Watson Institute through the EITC program.

For More Information

You may direct questions to the Chief Development Officer, Kara Mostowy at [email protected], or 412-749-2885.

The Watson Institute is grateful for your contributions through the Educational Improvement Tax Credit program. Your donations allow Watson to support students with special needs in the public school setting.

Always consult your tax advisor when making decisions that have tax implications.