The Future of the EITC Is Being Decided Right Now
July 7, 2026
When we wrote last week, the Legislature was debating wholesale changes to the Educational Improvement Tax Credit (EITC) program. On Sunday, July 12, Governor Shapiro signed the bipartisan $50.85 billion 2026–27 state budget, leaving the EITC program fully intact. The restructuring contemplated by HB 2632 did not become law, and the program remains unchanged.
The EITC program will remain the same for this fiscal year
The key takeaway for your organization is simple: there are no changes to how you qualify for, report on, or receive contributions. The two-year commitment pathway to the 90% credit remains the same. The existing SO and EIO categories remain the same. There is no new 2% remittance, no 90% spend-down mandate, no mandatory income verification regime, and no consolidation into a single “scholarship granting organization” structure.
Legislators who negotiated the deal were explicit on this point in announcing it: the final budget included no cuts to the EITC program, preserving scholarship opportunities as they exist under current law. The practical takeaway for donors and partners: proceed with the 2026–27 cycle exactly as you would have. Contributors should move forward. Renewals, joinders, and new applications will all continue under the same rules as last year.
One Decision Still Pending
While the State’s program continues unchanged, there still may be changes that will impact both scholarship organizations and educational improvement organizations. Governor Shapiro faces a January 1 deadline to decide whether Pennsylvania will opt into the new Federal Scholarship Tax Credit, which operates like EITC but offers individuals $1,700 in federal credits for scholarship contributions. These credits are dollar-for-dollar.
If Pennsylvania were to opt in, the federal program would sit alongside the State EITC program and open a substantial new funding opportunity for private schools, public school education foundations, charter school foundations, and colleges with dual enrollment programs. Other types of educational improvement organizations may still benefit, but we will not know until the IRS regulations are published. Those regulations are scheduled to be available in September of this year.
