Tax Credits to Support Early Childhood Education
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Supporting equitable access to creative arts education? Saving money on your taxes?
Then the Educational Improvement Tax Credit (EITC) program might be right for you!
What is the Educational Improvement Tax Credit (EITC) program?
Through the EITC-Special Purpose Entity program, individuals who owe Pennsylvania State taxes can join a limited partnership established specifically to provide scholarships to eligible schools. Participating in this partnership triggers a 90% PA income tax credit — a terrific way to fund arts education at Settlement while simultaneously reducing your tax burden. IT’S A WIN-WIN!
Who benefits?
CHILDREN IN NEED: When you participate in an eligible Special Purpose Entity (SPE) in support of Settlement, your gift supports the Kaleidoscope Preschool Arts Enrichment Program, our award-winning arts-integrated preschool.
- Kaleidoscope is a nationally-renowned, full-day program that serves 113 students from low-income communities.
- 88% of our students are eligible for Head Start, qualifying them for free tuition.
- Our scholarly research has proven that our arts-integrated curriculum prepares children more effectively for Kindergarten than peer programs without arts-based curricula.
- Financial aid needs are high: we require more than $500,000 annually from individual, corporate, and foundation support to ensure our families have access to this extraordinary program.
YOU: When you give through EITC, you dramatically decrease your tax bill. Exactly how much you save depends on your individual situation. Remember, however, that a tax credit is always better than a tax deduction.
Example savings on a $10,000 gift*
| With no tax credit | With 90% tax credit | |
| Charitable amount | $10,000 | $10,000 |
| PA tax credit | — | $9,000 |
| Federal deduction | $10,000 | $1,000 |
| Federal tax rate | 35% | 35% |
| Federal tax savings | $3,500 | $350 |
| Total “cost” | $6,500 | $650 |
*Gifts can range from a minimum of $3,500 to more than $50,000.
How do I participate?
An individual who wishes to take advantage of this tax credit program may become a member of one of the Limited Liability Companies (LLCs) listed below. These SPEs are the only financial vehicles available for individuals (or companies who do not have direct tax credit approval) to realize tax credits in return for scholarship donations.
To join, an individual or company must make a two-year commitment to fund the LLC with at least the minimum donation. The LLC will then receive tax credits equal to 90% of the donation amount.
CENTRAL PA SCHOLARSHIP FUND (CPSF)
You must earn a minimum of $115,000 in state taxable income — either individually or together if Married Filing Jointly.
For either individuals or couples who are Married Filing Jointly, at least one participant must work for a business, own a business, or own stock in a Pennsylvania-based company.
The minimum contribution is $3,500 in each of two consecutive years.
SETTLEMENT MUSIC SCHOOL PRE-K SCHOLARSHIP COLLABORATIVE, LLC
You must have earned a minimum of $200,000, or $300,000 if Married Filing Jointly, in each of the prior two tax years, and reasonably expect the same for the current year. OR…
You must have net worth of over $1 million (not including primary real estate). OR…
You must be a trustee acting for a trust worth over $5 million.
The minimum contribution is $2,000 in each of two consecutive years.
How do I sign up?
To learn more about giving through EITC, please email Chief Advancement Officer Amelia Schmertz at amelia.schmertz@settlementmusic.org.
Please consult your tax adviser to make sure this offer is right for you.