Pennsylvania EITC and OSTC Scholarship Programs

Pennsylvania's Scholarship Tax Credit programs

Pennsylvania operates two tax credit scholarship programs — the Educational Improvement Tax Credit (EITC) established in 2001 and the Opportunity Scholarship Tax Credit (OSTC) established in 2012. Both are administered by the Pennsylvania Department of Community and Economic Development (DCED). Together they form the second-largest tax credit scholarship program in the nation and serve over 85,000 students annually.

The key difference: EITC is open to any income-eligible student statewide, while OSTC is limited to students who reside within the attendance boundary of a low-achieving public school (bottom 15% based on combined math and reading PSSA scores). The Pennsylvania OSTC page lists participating schools for the 2026-27 school year and links the approved opportunity scholarship organizations.

Am I eligible?

Your child may qualify if:

• Household income at or below $122,322 plus $21,531 per dependent member of the household (adjusted annually for inflation). DCED's organization guidelines add the $21,531 allowance for the scholarship student and for each other dependent, as defined by the IRS. The $122,322 base is the household amount before those allowances. For a family of four with two adults who are not IRS dependents and two children who are, that is two allowances, so the limit is $165,384.
• Students with disabilities: Eligible if family income is at or below 150% of the baseline income level
• Students enrolled in a special education school: Eligible if household income is at or below (baseline + allowances) × 2.993
• OSTC additional requirement: Your child must reside within the attendance boundary of a public school on PDE's low-achieving school list (bottom 15% based on combined math and reading PSSA scores). PDE publishes this list annually.

Priority placement — Scholarship Organizations must give preference to:

1. Students who received a scholarship in the prior year (renewal priority)
2. Students whose household income does not exceed 185% of FPL (~$59,500 for a family of four)

Military combat zone compensation, COVID-19 government relief payments, and hospitalization/disability payments are excluded from the income calculation.

How much can my child receive?

• Covers tuition and school-related fees at a Pennsylvania school (including fees at special education schools)
• OSTC also covers district transportation costs
• Scholarship cannot exceed actual tuition charged by the school
• Awards are typically partial — the statewide average was $2,659 in 2022-23

Demand is high: in 2022-23, nearly 80,000 student applications went unfunded due to program caps — almost 1 in 2 applicants.

How to apply

Each Scholarship Organization manages its own application process — there is no centralized state portal for families. Pennsylvania has over 200 approved Scholarship Organizations.

1. Verify your eligibility — confirm household income and, for OSTC, check if your child's assigned public school is on PDE's low-achieving school list
2. Find a Scholarship Organization — DCED publishes the approved list at dced.pa.gov/scholarship-organizations
3. Contact the Scholarship Organization and complete their application process
4. Provide income verification and other required documents
5. If approved, scholarship funds are sent directly to the school

Browse the Scholarship Organizations listed on this page to find one serving your area.

How the tax credit works

Pennsylvania's EITC and OSTC provide tax credits to businesses that donate to approved Scholarship Organizations. Individual donors participate through Special Purpose Entities (SPEs) — LLCs formed specifically for EITC/OSTC donations, which pass credits through to members.

• K-12 maximum credit: $750,000 per taxable year. The same 75% and 90% rates, and this maximum, apply to a contribution to a scholarship organization, an educational improvement organization, or an opportunity scholarship organization.
• Pre-K maximum credit: $200,000 per year, for a contribution to a pre-kindergarten scholarship organization
• Eligible taxes: Corporate Net Income Tax, Personal Income Tax (via SPE), Insurance Premium Tax, Bank Shares Tax, and several others
• No carry-forward: Credits not used in the tax year cannot be carried forward, carried back, or transferred (exception: pass-through entities may elect to apply unused credits to owners' tax liability in the immediately following year)
• No statutory minimum donation — in practice, SPEs set their own minimums (typically $2,500-$5,000)

DCED's OSTC program page states that total program funding is $50 million.

How to donate

Businesses must reserve credits through DCED's Enterprise eGrants System before donating. Credits are approved on a first-come, first-served basis by day submitted.

1. Apply through the Enterprise eGrants System to reserve your tax credits
2. Receive approval from DCED
3. Make your donation to your chosen Scholarship Organization within 60 days of the approval letter
4. Submit proof of contribution to DCED within 90 days of the approval letter
5. Claim the credit on your Pennsylvania tax return

For individual donors: Participate through a Special Purpose Entity (SPE). SPEs are LLCs formed specifically for EITC/OSTC donations — credits flow through to individual members' PA personal income tax liability.

Important: Donors cannot designate a specific student — this is prohibited by law and can result in removal from the program. Donors may designate their donation to a specific school or organization.

Program impact

Historical scholarship counts and average awards:

Over 200 Scholarship Organizations operate across all 67 Pennsylvania counties.