Student Funding

Use of Funds 

Qualifying expenses include tuition, fees, and district transportation. 

Funding Amount and Source 

 Qualifying private donors contribute to approved SOs and then each SO determines scholarship amounts. Most tax credits are worth 75% of the contribution; however, a 90% credit can be claimed if the corporation commits to two consecutive annual contributions. In either case, the maximum tax credit is $750,000 per company; however, this cap is lifted from October 1 through November 30 during years when there are unclaimed credits. Tax credits for contributions to the scholarship organization for economically disadvantaged students are worth 85% of the contribution, increase to 99% for a commitment to two consecutive annual contributions, and are not subject to the maximum limit per company. Credits are awarded to companies on a first-come, first-served basis until the $540 million cap is reached. No less than $60 million of the credits must be used for scholarships for economically disadvantaged students, and no more than $30.5 million of the credits may be used for scholarships for pre-kindergarten students. 

(Last updated July 26, 2024)

Student Eligibility

Children are eligible for scholarships if their household incomes are less than $112,348 plus $19,775 for each child in the family in 2024. For example, a family with one child must have an income below $132,123, whereas a family with three children must have an income below $171,673. The figures increase in subsequent years to account for inflation. Students with special needs are eligible for scholarships if they come from families who earn 150% of the baseline income level (for example, a family with one child may earn up to $142,011 in 2024) or less, and those with the most severe special needs who are enrolled in special education-specific schools are eligible if they come from families who earn approximately 299% of the baseline income level ($171,475 for a one-child family in 2024) or less. 

(Last updated July 15, 2024) 

EdChoice Expert Feedback

Pennsylvania’s Educational Improvement Tax Credit program helps tens of thousands of students access schools that are the right fit for them, but policymakers could do more to expand educational opportunity. Eligibility for the scholarships is limited to students from low- and middle-income families. Almost three out of four Pennsylvania students are eligible for a scholarship, but less than five percent of students statewide actually use a scholarship from one of Pennsylvania’s two tax-credit scholarship programs (including the Opportunity Scholarship Tax Credit program). The average scholarship size is about $2,600, which is only about 15 percent of the average expenditure per student at Pennsylvania’s district schools. Tax credits are worth 75 percent to 90 percent of the value of the contributions to scholarship organizations, but only $263 million in tax credits are available for K–12 scholarships annually, which is equivalent to only 0.42 percent of Pennsylvania’s total K–12 revenue. To expand access to educational choice, Pennsylvania policymakers should dramatically increase the available tax credits and expand eligibility to all students (prioritizing scholarships based on need). The program could also be converted into an education savings account to ensure that all students have access to the education that’s the right fit for them, whether private school or a customized course of education. Pennsylvania’s scholarship program generally avoids unnecessary and counterproductive regulations. (Last updated December 18, 2023)

Rules and Regulations

Program Guidelines

• Income Limit: $112,348 plus $19,775 per child (higher for students with special needs)
• Prior Year Public School Requirement: None
• Enrollment Cap: None
• Scholarship Cap: Full tuition
• Testing Mandates: None
• Credit Value: 75% (or 85% for contributions to the scholarship organization for economically disadvantaged students) / 90% (or 99% for contributions to the scholarship organization for economically disadvantaged students) with a commitment to the same contribution amount for two consecutive years;
• Per Donor Credit Cap: $750,000 (except for contributions to the scholarship organization for economically disadvantaged students)
• Total Tax Credit Cap/Budget Cap: $540 million (with $60 million for economically disadvantaged student scholarships and only $30.5 million for pre-kindergarten scholarships)
• Special Needs Pathway: Priority

Education Provider Guidelines

• Click Here for the Program Administrator’s Parent Handbook
• Accreditation/Approval: State or regional
• Employment Standards: N/A
• Nondiscrimination: State and federal
• Calendar/Curriculum/Attendance: N/A
• Financial: N/A
• Miscellaneous: Do not recruit a student for athletic purposes

Scholarship Organization Guidelines

• Scholarship to Contribution Ratio: Use at least 90% of contributions for scholarships
• State Reporting: Submit an annual report to the state detailing donations received and scholarships awarded
• Financial: Submit a copy of a financial audit conducted by a certified accounting firm
• Award Priority: Renewing students
• Miscellaneous:
  • Exempt from federal income tax under 501(c)(3) of the Internal Revenue Code
  • Make scholarships available for more than one school
  • Verify applicants’ income information

Education Provider Guidelines

• Comply with federal and state nondiscrimination laws
• Do not recruit a student for athletic purposes

(Last updated September 27, 2024)

Governing Statutes

24 Pa. Stat. §§ 20-2001-B through 2013-B 

(Last updated July 26, 2024) 

Legal History

No legal challenges have been filed against the program.

(Last updated July 26, 2024)