Maximizing EITC Benefits: How Businesses Can Support Radnor Education with Pennsylvania Tax Credits
March 29, 2025
New Federal Tax Credit for Scholarships: What You Need to Know About the 2025 Bill
July 14, 2025
Empowering Education Through 100% Tax-Efficient Philanthropy
A New Era in Educational Giving
Section 110109 of the One Big Beautiful Bill Act (H.R. 1, 119th Congress, 2025-2026) establishes a tax credit for individual contributions to support private education. This bill, if enacted, will bring about a transformative shift in American education. The legislation establishes a federal tax credit for contributions to approved Scholarship Granting Organizations (SGOs) — creating a powerful new way for donors to give. Unlike a deduction, which merely reduces taxable income, this credit directly reduces donors’ federal tax liability dollar for dollar. For eligible donors, it offers a unique opportunity to support educational access at no cost.
Key Features of the Federal Tax Credit Program
What Is It?
- A 100% federal income tax credit for contributions to qualified SGOs
- Available to individual taxpayers
Credit Amount and Limits
- Credit equals 100% of contributions made in the tax year
- Annual cap is the greater of:
- 10% of Adjusted Gross Income (AGI), or
- $5,000
- Credit is reduced by any state tax credit received for the same donation
- Unused credits may be carried forward for up to 5 years (first-in, first-out)
Who Qualifies for Scholarships?
- Students from households earning ≤ 300% of Area Median Gross Income (AMGI)
- Students must be eligible to attend a public elementary or secondary school
Qualified Educational Expenses Include:
- Tuition (including homeschool tuition)
- Curriculum, textbooks, and educational supplies
- Online educational content
- Tutoring by licensed or qualified instructors
- Standardized test and college exam fees
- Dual enrollment in higher education courses
- Educational therapies (e.g., speech, occupational, behavioral)
Note: Private schools must accept and serve students with IEPs to qualify
Additional Rules
- Contributions receiving this credit cannot also be deducted as charitable gifts
- Donations may be made in cash or publicly traded securities (stock)
Friends of Education: Positioned to Qualify as a federal scholarship granting organization (SGO)
Montgomery County Scholarships, Inc. d/b/a Friends of Education has operated for three years under Pennsylvania’s EITC program as an approved scholarship organization.
Friends of Education will qualify as a SGO because it meets the legislation requirements:
- 501(c)(3) nonprofit status
- Scholarships limited to K–12 education
We are actively monitoring federal guidance and preparing to meet all compliance requirements as implementation unfolds.
What This Means for Donors
- Make a direct impact on students without financial loss
- Combine federal and state tax credits to maximize giving
- Contribute cash or appreciated stock and reduce your tax liability on a net basis
What This Means for Private Schools
- Increase your financial aid grants in a transformative way
- Solicit donors who can make gifts to take advantage of the tax credit program with very low overhead
What This Means for Educational Improvement Organizations
- New funding opportunities may be available for your EIO programs
Our Track Record in Pennsylvania
Friends of Education
- We facilitated over $28 million in tax credit contributions under Pennsylvania’s Educational Improvement Tax Credit (EITC) Program in 2024, serving as both a scholarship organization and direct funder through our special purpose entities.
- Montgomery County Scholarship, d/b/a, Friends of Education is a Scholarship Organization under Pennsylvania’s Educational Improvement Tax Credit (EITC) Program.
- We award donations to private schools for tuition assistance at very low cost
- We help private schools provide tuition assistance to income-eligible students across Pennsylvania
- We file detailed annual reports with the Pennsylvania Department of Community and Economic Development (DCED)
Partner With Us
Our staff, which consists of tax attorneys and a former private school development officer, will help you market this program as soon as it is enacted into law.
If you have questions about the Educational Choice for Children Act (ECCA) of 2025 or about contributing through Pennsylvania’s EITC or the new federal scholarship tax credit program, we encourage you to contact us at info@pataxcredits.org.
