Little Known Tax Credit for Charitably-Inclined Business Owners

The Opportunity Scholarship Tax Credit Program (OSTC), formerly known as the Educational Improvement Tax Credit (EITC), provides business owners an opportunity to direct their tax dollars to an educational charity that is close to their heart.

Eligible Pennsylvania business owners (see the below eligibility requirements from The Pennsylvania Departments of Community and Economic Development) can contribute to an opportunity scholarship organization and apply for a tax credit of up to 75 percent of their tax liability. Business owners who commit to donating the same amount for two consecutive years can apply for a credit of up to 90 percent of their tax liability. The tax credits must be applied to the same year the contribution was made.

Eligibility

Organizations authorized to do business in Pennsylvania who are subject to one or more of the following 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 Institution Tax
• Insurance Company Law of 1921
• Personal Income Tax of S corporation shareholders or Partnership partners

It’s important to note that there is a limit to the amount of funding this program allows, so ultimately it’s first come, first serve for business owners who want to take advantage.

Essentially, this is ideal for qualified business owners who feel they want to have more control over where their tax dollars are being put to work.

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