⏰ CRITICAL: EITC Applications Open July 1st!
Credits run out within DAYS. Mark your calendar and apply on Day 1. Renewals open May 15th.
The 2026 Pennsylvania "Stack"
Pennsylvania now has two powerful state incentives: the EITC Pre-K Scholarship (90-100% credit for donations) AND the brand-new Act 56 Employer Child Care Contribution Tax Credit (30% of direct provider payments)!
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
100% credit on first $10,000, 90% on remaining up to $200,000/year. Two-Year Rule: The 90% rate requires a two-year commitment to the same PKSO.
🎓 The EITC "Pre-K Scholarship" Strategy
Instead of paying for a specific employee's child, your business donates to a Pre-Kindergarten Scholarship Organization (PKSO). This funds scholarships for low-to-middle income families—which likely includes many of your own hourly workers! And you get 90-100% of your donation back as a state tax credit.
🆕 NEW for 2026: Act 56 — Direct Employer Credit (30%)
Pennsylvania now also offers the Employer Child Care Contribution Tax Credit Program (Act 56 of 2024). Unlike EITC, this credit is for direct contributions to an employee's child care provider—no donation to a middleman required.
- Rate: 30% of contributions made directly to a child care provider on behalf of employees
- Cap: $500 per employee per year
- Application: Apply via the myPATH portal by January 31st of the year following the contribution
- Best For: Employers who want to directly subsidize care costs without going through a PKSO
⚠️ The "Lottery" Warning
EITC is a lottery. Applications open July 1st (May 15th for renewals). The credits often run out in DAYS. You must apply on Day 1. If you wait until mid-July, the money will likely be gone!
⭐ Keystone STARS Quality Requirement
For maximum benefit, partner with Keystone STAR 3 or STAR 4 rated centers. This ensures quality care and may be required for certain state programs. Don't partner with just anyone—partner with quality!
The EITC Math: How 90-100% Works
Here's how the Pennsylvania EITC Pre-K Scholarship credit actually works:
| Donation Amount | Credit Rate | State Tax Credit | Net Cost to You |
|---|---|---|---|
| First $10,000 | 100% | $10,000 | $0 |
| Next $90,000 | 90% | $81,000 | $9,000 |
| Total $100,000 Donation | 91% Average | $91,000 Credit | $9,000 Net |
💡 The Bottom Line
A $100,000 donation to a Pre-K Scholarship Organization costs your company only $9,000 net—and funds scholarships for local children (including potentially your own employees' kids). It's the most popular corporate tax credit in Pennsylvania history for a reason!
🏦 PA Success Story: PNC Bank (Pittsburgh)
The Gold Standard for Corporate Engagement in Early Childhood
The PNC "Grow Up Great" Initiative
PNC Bank is the corporate champion of early education in Pennsylvania. Through their "Grow Up Great" initiative, they haven't just donated—they transformed the landscape.
The Strategy
- EITC Leverage: PNC utilized the PA EITC Program to funnel millions into Pre-K scholarships and Head Start programs
- Tax Efficiency: By leveraging the 90% state tax credit, PNC effectively directed their state tax dollars toward early education instead of the general fund
- Community Impact: Thousands of children across Pennsylvania have received scholarships
- Brand Value: "Grow Up Great" is now synonymous with corporate responsibility in PA
💡 The Lesson for PA Employers
"You don't need to be a bank to bank on this. Any PA business can use the EITC program to turn a $10,000 tax bill into a $10,000 scholarship for local children, costing the company almost nothing. It's the most efficient way to support your community AND your workforce."
Pennsylvania Compliance & Resources
🎓 EITC Application Portal (DCED eGrants)
CRITICAL: Apply July 1st (May 15th for renewals) via the DCED eGrants system. Funds run out in days! Pro-Tip: Have your DCED login credentials ready BEFORE July 1st.
PA EITC Program →🆕 Act 56 — myPATH Portal
Apply for the new Employer Child Care Contribution Tax Credit by January 31st of the year following contributions. 30% credit, $500/employee cap.
PA myPATH Portal →⭐ Keystone STARS
Find STAR 3 and STAR 4 rated providers for quality assurance.
PA Keys (Keystone STARS) →📋 Licensing Requirements
All child care facilities must be licensed by the Pennsylvania Department of Human Services.
PA DHS Child Care →📄 Federal Form 8882
File IRS Form 8882 to claim the federal Section 45F credit.
IRS Form 8882 →🆕 April 2026: Expanded Child & Dependent Care Tax Credit (Signed into Law)
Governor Shapiro signed bipartisan legislation expanding Pennsylvania's Child and Dependent Care Enhancement Tax Credit. Employers can now receive a tax credit equal to 30% of their employees' eligible child care costs (maximum contribution of $500 per employee). This stacks with the Federal 45F credit for a powerful double benefit. PA Department of Revenue →
Pennsylvania Child Care Landscape
Key Pennsylvania Markets
Employers in these major Pennsylvania markets are leveraging EITC + 45F:
- Philadelphia – Healthcare, education, finance
- Pittsburgh – Tech, healthcare, finance (PNC HQ)
- Allentown-Bethlehem – Manufacturing, logistics, healthcare
- Reading – Manufacturing, healthcare
- Erie – Manufacturing, healthcare, insurance
- Scranton-Wilkes-Barre – Healthcare, distribution
- Lancaster – Agriculture, tourism, manufacturing
- Harrisburg – Government, healthcare, logistics
Qualified Intermediary Platforms for 45F
Under the One Big Beautiful Bill Act (OBBBA) 2026 updates, employers can now claim Section 45F credits for expenses paid to qualified intermediary service providers. These platforms help connect employees with licensed child care and manage benefits administration.
Child Care Marketplace Platforms
Technology platforms that connect employees with vetted, licensed child care providers. Expenses for subscription fees, matching services, and provider network access qualify under 45F.
Benefits Administration Services
Third-party administrators that manage employer child care benefits, including enrollment, provider payments, and compliance reporting. Administrative fees are now 45F-eligible.
Resource & Referral Agencies
Community-based organizations that help employees find quality child care. Contracts with R&R agencies qualify for the 10% referral credit component.
Child Care Subsidy Programs
Employer-funded subsidy programs that offset employee child care costs. Direct subsidies to employees for licensed care are fully eligible for the 40-50% credit.