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PA Tax Credit (EITC/OSTC) and SPE

Could this be true? Instead of sending my tax dollars to the state of Pennsylvania, I can give them to a private school of my choice? Really? Yes!


The IRS will allow contributions to state and local tax credit programs such as EITC and OSTC as deductible business expenses. On Wednesday, September 5, 2018, the Internal Revenue Service and the Treasury Department announced that payments under state or local tax credit programs such as the EITC and OSTC Programs may be deductible as business expenses. This would provide an opportunity for businesses to work around the $10,000 limit on state and local tax deductions.

“The business expense deduction is available to any business taxpayer, regardless of whether it is doing business as a sole proprietor, partnership or corporation, as long as the payment qualifies as an ordinary and necessary business expense,” said the IRS. “Therefore, businesses generally can still deduct business-related payments in full as a business expense on their federal income tax return.”

To read the full article by Accounting Today, click here.

Potential Tax Advantage through EITC/OSTC with New 2018 Tax Codes

With the new tax code now in place for 2018, it may be beneficial for you and/or your company to apply for EITC/OSTC funds. To learn more about how EITC/OSTC and the new tax codes can benefit your company, please contact either Joanne Martin at Dayspring or your CPA for more information. Opportunities exist for businesses to receive tax credits through these PA Tax Credit programs and Dayspring is an approved EITC/OSTC scholarship organization and participating school.


Many in the Pennsylvania state legislature have called the Educational Improvement Tax Credit (EITC) program the best educational initiative passed in Pennsylvania in the past 15 years. Funds for the program come from businesses that make contributions to non‐profit scholarship or educational improvement organizations. Since the program’s inception in 2001, more than 30,000 companies have pledged in excess $812 million to EITC organizations. The program benefits both public and private schools in Pennsylvania, and actually saves the state money – each student attending private schools saves the state approximately $12,000 in education costs.  If all 44,000 students receiving EITC scholarships would re‐enter the public school system, it would cost Pennsylvania taxpayers an additional $531.6 million per year.  The EITC program has received bipartisan support since its inception. To apply for EITC, download Dayspring’s EITC/OSTC Information Booklet, or download the Pennsylvania EITC Business Guidelines.


Additionally, in 2012, the Pennsylvania General Assembly passed a measure that allows parents of students in a failing school to choose something better for their children. The Opportunity Scholarship Tax Credit (OSTC) allows your business to redirect your business tax dollars to approved schools, like Dayspring Christian Academy. Your business’s redirected tax dollars are used to fund scholarship programs for students who live in areas served by the lowest achieving 15% of Pennsylvania’s public schools and who meet specific income criteria. These tax credit programs for Pennsylvania businesses redirect tax dollars to an approved scholarship organization. The DCA Scholarship Organization will then award scholarships to families at our school and across Pennsylvania to assist their children in attending the school of their choice. To apply for OSTC, download this helpful OSTC Informational Document.


A Special Purpose Entity or SPE is a new class of pass-through partnership that exists solely for the purpose of earning Educational Tax Credits (EITC) or Opportunity Scholarship Tax Credits (OSTC). It is easy to get tax credits by simply joining an SPE by signing a joinder agreement, which reserves your tax credits for the year. You complete the process by investing with the SPE after the SPE receives their award letter from the State. These contributions need to be made within a relatively short window of time (generally 60 days) from the SPE notice.

SPE’s allow a new group of individual donors to participate and receive EITC/OSTC tax credits along with an alternative way for business owners to receive individual EITC/OSTC tax credits. These EITC/OSTC tax credits can offset an individual’s joint or single PA tax liability allowing the individual to redirect their personal PA taxes to Dayspring Christian Academy as tuition scholarships. Contact Joanne Martin at or 717-285-2000 ext.211 for more information.

Would you like to learn more about how the EITC/OSTC programs are a win-win for businesses and Dayspring?