Could Your Child Get a Scholarship? How Pennsylvania's Tax-Credit Scholarships Work

A Pennsylvania family of four with two children can earn up to about $165,384 a year and still qualify for a private-school scholarship paid for through the state's tax-credit programs. Those programs are open now.

A new federal program could raise the income limit for a Pittsburgh-area family of four to roughly twice that, but only if Pennsylvania joins it.

The state and federal programs pay for scholarships the same basic way. Donors give to a nonprofit scholarship organization and receive a tax credit, which cuts their own tax bill. The big difference is that businesses make the donations for the state programs and individuals for the federal one. The organization pools their donors' gifts, chooses which eligible families receive scholarships, and pays the school directly.

Families apply to the organization, not to a donor, and get tuition help, not a tax credit. A donor can steer a gift to a school, but never to a particular child.

Pennsylvania has two of these programs. The Educational Improvement Tax Credit funds private-school scholarships for families under the income limit, wherever they live in the state.

The Opportunity Scholarship Tax Credit adds a similar program for children whose neighborhood public school is on the state's list of low-achieving schools. The scholarship pays tuition at a private school or at a public school in another district that takes tuition-paying students. A family in one of those school zones that already pays private-school tuition can apply for a scholarship from either program.

Both require Pennsylvania residency and share one statewide income limit: $122,322, plus $21,531 for the student and each other dependent. For a family of four with two children, that comes to $165,384.

The Educational Improvement Tax Credit also funds separate organizations that give pre-kindergarten scholarships for children ages 3 to 6. The state's scholarships cover tuition and school fees, up to the school's actual tuition. In the 2025-26 school year, Opportunity Scholarship awards topped out at $8,500, or $15,000 for students in special education.

Under either the state or the federal program, a scholarship is not a check the family can spend as it likes. The money goes straight to the school or to approved vendors or repays the family only for expenses it documents with receipts.

The federal program is new. It starts January 1, 2027, and provides a federal tax credit only for donations to a recognized scholarship granting organization in states that choose to join. States have until February 15, 2027 to finalize their list of SGOs. After 2027, January 1 will be the cutoff date for joining the program and September 30 of the preceding year for finalizing the list of SGOs in all subsequent years.

Pennsylvania has not joined. The Governor can make that decision, or the legislature can make it by passing a law.

If Pennsylvania joins, the federal program's income limit would apply, distinct from the state programs' limits. The federal limit on student eligibility is three times the median income of the area where the family lives. The federal limit would vary by region, so a family might qualify in the Pittsburgh area but not at the same income in a lower-income county.

For a Pittsburgh-area family of four, the federal limit comes to about $331,200, roughly twice the state limit of $165,384.

That figure is an estimate. It uses the U.S. Department of Housing and Urban Development's fiscal 2026 median family income for the Pittsburgh area and the Treasury's interim rules for the program. The final rules may define the measure differently or adjust it by household size.

On that estimate, a Pittsburgh-area family of four earning $200,000 would be over the limit for the state programs but under the federal limit.

The federal program differs in other ways, too. It is meant to cover more than tuition, though which expenses count, and whether homeschooling does, still awaits the Treasury's guidance.

Under either program, meeting the income limit makes a child eligible, but that alone does not mean they would receive a scholarship. The organizations that award the scholarships can award only what donors give, and they will have their own criteria for selecting which children receive scholarships among those eligible.

In Pennsylvania, the money runs out before the applicants do. The legislature caps the two state credits at a combined $680 million, and in 2023-24, 68,817 scholarship applications went unfunded, according to an analysis by the Commonwealth Foundation, an organization that advocates expanding the programs. The federal program has no cap on available funds.

One federal rule makes a state's first year in the program matter most. Families who receive a federal scholarship one year get priority the next, and their siblings come after them.

If Pennsylvania joins, the families chosen in its first year will be at the front of the line in the second, with their siblings right behind. A family that waits a year to apply will stand behind both.