Office of the Governor

In a speech to more than 600 business leaders in Central Pennsylvania, Gov. Tom Ridge urged all Pennsylvania employers to invest in a better education for the state?s children, by taking advantage of a new $30 million Education Tax Credit program. The tax credits are a component of new education reforms that Gov. Ridge recently signed into law.

The bill authorizes a tax-credit program that will serve as an incentive for charitable contributions to improve education in Pennsylvania. These tax credits will leverage funds for innovative programs for public schools. In its second year, the program could leverage up to $40 million in school-choice scholarships.

The Education Tax Credit program is part of House Bill 996, a new law that includes dramatic new education reforms for Pennsylvanias students, parents and schools. In addition to creating a new tax-credit program that gives businesses incentives to help improve education, including scholarships for public and private school tuition, the new law authorizes $500 grants for after-school tutoring to the parents of youngsters struggling in reading and math; establishes an anonymous statewide teacher test to better target professional development; allows parents and teachers to create innovative, new, first-in-the-nation independent schools; and includes the largest increase in special-education funding in a decade.

Under the Education Tax Credit program, corporations will get a credit against their state taxes of 75 cents for every dollar they donate to improve education and 90 cents on the dollar if the donation is a multi-year commitment. At least $20 million of the tax credit is earmarked for donations to nonprofit organizations to fund public or private school scholarships.

To qualify, scholarship programs would be limited to serving families with household incomes of no more than $50,000 a year, plus an additional $10,000 income for every dependent in that household. Leaders of the General Assembly committed to increase that scholarship portion of the tax credit to $30 million next year. At $30 million, and with a 75 percent credit, the program will leverage up to $40 million in public or private school scholarships for Pennsylvania children. The remainder of the tax credit is earmarked for innovative public school programs.