Education Improvement Tax Credit
Bethany Children’s Home is an approved EITC organization. Education Improvement Tax Credit funds will be used to support the academic support and enrichment programs provided at Bethany through the Haas Learning Center.
What is the Educational Improvement Tax Credit (EITC)
The EITC, established by Act 4 (H.B. 996, P.N. 1878, Session 2001), allows businesses to reduce state tax liability (e.g., Corporate Net Income Tax, Capital Stock Franchise Tax, Bank and Trust Company Shares Tax, Title Insurance Companies Shares Tax, Insurance Premiums Tax, Mutual Thrift Institution Tax) by contributing/donating (cash, personal property, or services) to a nonprofit educational improvement or nonprofit scholarship organization.
The EITC program is administered by the Department of Community and Economic Development (DCED) on a first-come-first-serve basis. Total tax credits approved shall not exceed $30 million in a fiscal year (with no less than $20 million for contributions to scholarship organizations, and no less than $10 million for contributions to educational improvement organizations).
Who may receive an Educational Improvement Tax Credit?
An EITC is granted to a business of a donation to a scholarship organization or educational improvement organization equal to 75% of the total contributed during the taxable year by a business. First, a tax credit may be granted equal to 90% of the amount contributed, and if the business provides a written commitment to contribute the same amount for two consecutive years. Also, tax credits shall not exceed tax liability of a business for a taxable year, nor shall credits exceed $100,000 annually per business. Above all, tax credit must be applied in the year the contribution is made. However, unused tax credits may not be carried forward or backward.
How do you apply for an Educational Improvement Tax Credit?
A business must submit an EITC application annually with DCED, and that determines if the firm qualifies for the credit. Applications are processed by DCED on a first come, first served basis. All applications received will be processed by DCED by random before moving onto the next day’s applications. After that, a letter will be sent by DCED to confirm the business’s status (approval or disapproval).
When does a business that commits to the same contribution for two consecutive years apply for the EITC in the second year?
First, applications for the second year of a two-year contribution commitment will be accepted beginning May 15 of the applicable year, and if received by DCED on or before July 1, will be processed prior to any other applications for tax credits received by the DCED. Secondly, applications for the second year of a two-year commitment received after July 1, are processed on a first-come-first-serve basis, along with other business applications received for that year.