Tax Credits Guide

Discover the tax strategies that can make a meaningful impact on your workforce and bottom line

The Tax Credits Guide is tailored for Pennsylvania employers dedicated to maximizing the financial benefits associated with supporting working families. In this guide, we navigate the landscape of business tax credits designed to offset the costs associated with both internal and community-based child care initiatives. Explore the Employer-provided Child Care Facilities and Service tax credit, the Community Reinvestment Act, and the Pre-kindergarten Educational Improvement Tax Credit. Gain practical insights and valuable information to leverage these tax credits effectively, allowing your organization to not only enhance the well-being of your employees but also contribute positively to your community.

PA529: Introducing Pennsylvania's New Employer Tax Credit

A new employer tax credit encourages Pennsylvania employers to contribute to their employees’ 529 accounts. Pennsylvania employers are now eligible to claim a 25% state tax credit against the aggregate amount of all matching contributions to employee 529 accounts of up to $500 per employee per tax year.

Employer Child Care Contribution Tax Credit Program (PA)

The Employer Child Care Contribution Tax Credit Program encourages Pennsylvania businesses to support their employees who have children in eligible child care or early learning programs. Employers can receive a state tax credit when they make contributions toward their employees’ child care costs. The program also ensures that licensed child care providers can easily participate.

Employer-Provided Child Care Facilities and Service Tax Credit (Federal)

This federal credit offers eligible employers the opportunity to claim significant tax advantages for qualifying expenditures related to child care facilities, resources, or referrals benefiting their employees. With the credit amounting to 25% of qualified child care facility expenditures and an additional 10% of qualified child care resource and referral expenditures, your business can potentially enjoy substantial savings.

Community Reinvestment Act

Leverage the Community Reinvestment Act (CRA) to make a positive impact on the early childhood sector while meeting banking requirements. banks can fulfill CRA obligations by engaging in activities and investments such as extending credit to child care providers, providing forgivable loans or grants to child care entities, and offering bank staff time and financial expertise to support the child care industry. Explore the avenues of community investment outlined by the CRA to align your bank's initiatives with social responsibility and contribute to the well-being of early childhood development.

Pre-Kindergarten Educational Improvement Tax Credit

Corporations can receive tax credits by contributing to pre-kindergarten scholarship organizations that benefit low- and middle-income families and support innovative public school programs. Explore the guidelines and initiate your application for Pre-K EITC credits through DCED's electronic single application system.