HB 1763 — An Act amending the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, in educational tax credits, further providing for definitions and providing for compliance with Federal tax credit for contributions to scholarship organizations.

PRINTER'S NO.   2173

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1763
                                                Session of
                                                  2025

     INTRODUCED BY GLEIM, GREINER, WALSH, BERNSTINE, JAMES, RAPP,
        HAMM, PICKETT, ANDERSON, M. MACKENZIE AND D'ORSIE,
        JULY 24, 2025

     REFERRED TO COMMITTEE ON EDUCATION, JULY 24, 2025


                                       AN ACT
 1   Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
 2      act relating to the public school system, including certain
 3      provisions applicable as well to private and parochial
 4      schools; amending, revising, consolidating and changing the
 5      laws relating thereto," in educational tax credits, further
 6      providing for definitions and providing for compliance with
 7      Federal tax credit for contributions to scholarship
 8      organizations.
 9      The General Assembly of the Commonwealth of Pennsylvania
10   hereby enacts as follows:
11      Section 1.     Section 2002-B of the act of March 10, 1949
12   (P.L.30, No.14), known as the Public School Code of 1949, is
13   amended by adding a definition to read:
14   Section 2002-B.    Definitions.
15      The following words and phrases when used in this article
16   shall have the meanings given to them in this section unless the
17   context clearly indicates otherwise:
18      * * *
19      "Secretary."     The Secretary of Community and Economic
20   Development of the Commonwealth.
 1      * * *
 2      Section 2.        The act is amended by adding a section to read:
 3   Section 2014-B.       Compliance with Federal tax credit for
 4                  contributions to scholarship organizations.
 5      (a)   Designated agency.--In accordance with 26 U.S.C. §
 6   25F(g)(1)(B) (relating to qualified elementary and secondary
 7   education scholarships), the department is designated as the
 8   agency to make elections on behalf of the Commonwealth with
 9   respect to Federal tax benefits related to contributions of
10   individuals to scholarship granting organizations.
11      (b)   Notice.--By October 1, 2026, and each October 1
12   thereafter, the secretary shall transmit a notice to the United
13   States Secretary of the Treasury opting into the Federal tax
14   credit for contributions of individuals to scholarship granting
15   organizations as required under 26 U.S.C. § 25F. The notice
16   shall include a list of the scholarship organizations located in
17   this Commonwealth that meet the requirements for a scholarship
18   granting organization under 26 U.S.C. § 25F(c)(5).
19      (c)   Submission of information.--To assist the department in
20   determining if a scholarship organization meets Federal
21   requirements under 26 U.S.C. § 25F(c)(5), each scholarship
22   organization shall submit the following information to the
23   department, in a form and manner prescribed by the department,
24   by June 1, 2026, and each June 1 thereafter:
25            (1)   Proof that the scholarship organization:
26                  (i)    is exempt from Federal taxation under 26 U.S.C.
27            § 501(c)(3) (relating to exemption from tax on
28            corporations, certain trusts, etc.); and
29                  (ii)    maintains one or more separate accounts
30            exclusively for qualified contributions in order to

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 1        prevent the comingling of qualified contributions with
 2        other amounts.
 3        (2)   Certification by the scholarship organization that
 4    the scholarship organization complies with all of the
 5    following:
 6              (i)     Provides scholarships to 10 or more students who
 7        do not all attend the same school.
 8              (ii)    Spends not less than 90% of the income of the
 9        scholarship organization on scholarships for eligible
10        students.
11              (iii)    Does not provide scholarships for any expenses
12        other than qualified elementary or secondary education
13        expenses as defined under 26 U.S.C. § 530(b)(3)(A)
14        (relating to Coverdell education savings accounts).
15              (iv)    Provides a scholarship to eligible students
16        with a priority for:
17                     (A)   students awarded a scholarship the previous
18              school year; and
19                     (B)   after application of clause (A), any
20              eligible students who have a sibling who was awarded
21              a scholarship from the scholarship organization.
22              (v)     Does not earmark or set aside contributions for
23        scholarships on behalf of any particular student.
24              (vi)    Verifies the annual household income and family
25        size of an eligible student who applies for a scholarship
26        to ensure that the student meets the requirements of 26
27        U.S.C. § 25F(c)(2)(A) and limits the awarding of a
28        scholarship to an eligible student who is a member of a
29        household for which the income does not exceed the amount
30        established under 26 U.S.C. § 25F(c)(2)(A).

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 1                (vii)   Does not award a scholarship to any
 2          disqualified person as determined under the rules of 26
 3          U.S.C. § 4946(a) (relating to definitions and special
 4          rules).
 5    (d)   Compliance status.--
 6          (1)   By September 1, 2026, and each September 1
 7    thereafter, the department shall notify each scholarship
 8    organization of its compliance status and whether the
 9    scholarship organization will be included on the official
10    list submitted to the United States Secretary of the Treasury
11    under subsection (b).
12          (2)   After a scholarship organization is initially
13    determined to be compliant under this section, the
14    scholarship organization shall be deemed compliant and remain
15    on the list submitted to the United States Secretary of the
16    Treasury each year.
17          (3)   The department may perform random audits to ensure
18    that a scholarship organization remains compliant with this
19    section.
20          (4)   If the department determines that a scholarship
21    organization is not compliant with this section, the
22    department may remove the scholarship organization from the
23    list submitted to the United States Secretary of the
24    Treasury.
25    (e)   Guidelines.--
26          (1)   Within 60 days of the effective date of this
27    subsection, for the implementation of this subsection, the
28    department shall issue guidelines for the implementation of
29    this section.
30          (2)   The department may not add requirements to the

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1     guidelines beyond what is required under 26 U.S.C. § 25F.
2         (3)   The department shall transmit the guidelines to the
3     Legislative Reference Bureau for publication as a statement
4     of policy in the next available issue of the Pennsylvania
5     Bulletin and shall post the guidelines on the department's
6     publicly accessible Internet website.
7     Section 3.    This act shall take effect immediately.




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