PENNSYLVANIA - In a significant move to combat the rising cost of living, Governor Josh Shapiro officially signed the Working Pennsylvanians Tax Credit (WPTC) into law as part of the most recent state budget.
This landmark legislation establishes Pennsylvania's first-ever state-level Earned Income Tax Credit (EITC), joining 31 other states that offer similar relief to working families. The program is expected to deliver approximately $193 million in tax relief to more than 940,000 households across the Commonwealth starting in the 2026 tax filing season.
How the $805 Tax Break Works
The WPTC is modeled directly after the federal Earned Income Tax Credit, which has long been hailed as one of the country's most effective anti-poverty tools. Under the new state law:
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The 10% Match: Eligible Pennsylvanians will receive a state tax credit equal to 10% of their federal EITC amount.
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Maximum Benefit: For families with three or more qualifying dependents, the maximum state payout reaches $805.
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Refundable Credit: This is a refundable credit, meaning if the credit amount exceeds the total state taxes you owe, you will receive the difference as a cash refund.
Eligibility and Estimated Payouts
Eligibility for the state credit is tied directly to federal guidelines. If you qualify for the federal EITC, you automatically qualify for the Pennsylvania WPTC. The amount you receive depends on your filing status, earned income, and the number of qualifying children.
The estimated payouts scale based on family size. For those with no dependents, the maximum credit is approximately $65. This increases significantly for families with children: those with one dependent can receive up to $433, while those with two dependents are eligible for up to $715. The highest tier is reserved for families with three or more dependents, who can receive the full $805 credit.
For the 2025 tax year, a married couple filing jointly with one child can earn up to approximately $57,554 and still remain eligible for the credit.
Automatic Enrollment: No Extra Paperwork Required
One of the most innovative features of the Working Pennsylvanians Tax Credit is its simplicity. To ensure that the relief reaches those who need it most, the process has been streamlined for taxpayers:
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Claim the Federal Credit: When you file your federal tax return for 2025 (in early 2026), ensure you claim the federal EITC if you are eligible.
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Automatic Application: When filing your Pennsylvania state return online, the Department of Revenue will automatically apply the 10% state credit based on your federal data.
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Receive Your Refund: The credit will either reduce your state tax liability or be included in your tax refund check.
A "Win-Win" for the Economy
State leaders emphasize that this credit is an investment in Pennsylvania’s future. For every dollar returned to a working family through the EITC, studies suggest it generates significant local economic growth as families immediately spend that money on essentials like groceries, childcare, and transportation.
"This is about putting money back into the pockets of hardworking Pennsylvanians who are feeling the squeeze," Governor Shapiro noted during the budget announcement. This represents the seventh tax cut passed in three years, aimed at making a tangible difference for residents across the state.
Would you like me to find the nearest free tax preparation site (VITA) in Pennsylvania to help you claim this new credit?
