Nearly one million Pennsylvania workers just became eligible for hundreds of dollars in extra tax relief.
If you’re among the 940,000 Pennsylvanians earning a modest income, you could receive up to $805 back when you file your 2025 taxes starting in January 2026.
Governor Josh Shapiro signed this new Working Pennsylvanians Tax Credit (WPTC) into law on November 12, 2025, as part of the state’s 2025-26 budget.
The credit represents a significant shift in Pennsylvania’s tax policy—the first major anti-poverty initiative in the state’s income tax system in over 50 years.
Here’s everything you need to know about this new tax credit, who qualifies, how much you can get, and exactly how to claim it.
The WPTC is a refundable state tax credit that puts money directly into the pockets of low- to moderate-income workers. It’s modeled after the federal Earned Income Tax Credit (EITC), one of the nation’s most effective anti-poverty programs.
The state credit equals 10% of whatever you receive from the federal EITC. This means if you qualify for $4,000 from the federal credit, you’ll automatically receive an additional $400 from Pennsylvania—no extra paperwork required.
This is crucial: even if you don’t owe any Pennsylvania income tax, you can still receive this credit as a cash refund. Many working Pennsylvanians earn just enough to get by but not enough to accumulate a significant state tax bill.
The refundable nature ensures that these workers—the ones who need relief most—actually benefit.
Think of it this way: if your Pennsylvania tax bill is $200 but you qualify for a $500 WPTC, you’ll receive a $300 refund check. The credit doesn’t just reduce what you owe; it can put real money in your bank account.
The maximum credit is $805, but your actual amount depends on three factors: your filing status, your income, and the number of children or dependents you have.
These amounts are 10% of the maximum federal EITC for each category. For example, a single parent with three children earning around $18,000 annually could receive the full $805 state credit on top of their federal credit of $8,046—totaling $8,851 in tax credits.
If you already qualify for the federal Earned Income Tax Credit, you automatically qualify for the state version. Here’s what that means in practical terms.
You must have earned income from work—wages, salaries, tips, or self-employment income. Investment income like dividends and interest doesn’t count, and you cannot have more than $11,950 in investment income for 2025.
You must be a U.S. citizen or legal resident for the entire year.
You must have a valid Social Security Number (not an Individual Taxpayer Identification Number).
You cannot file as “Married Filing Separately” unless you meet specific IRS exceptions for separated spouses.
You must live in Pennsylvania and file a PA-40 state tax return.
Your eligibility depends on your adjusted gross income (AGI), filing status, and number of qualifying children. Here are the maximum income thresholds:
For example, a married couple with two children earning $60,000 combined would qualify, but if they earned $65,000, they would not.
If you don’t have children, you must also:
If you’re married filing jointly without children, only one spouse needs to meet the age requirement.
Your child must meet all of these tests:
Relationship: Your son, daughter, stepchild, adopted child, foster child, brother, sister, or a descendant of any of these (like a grandchild or niece).
Age: Under 19 at year’s end (or under 24 if a full-time student for at least five months). There’s no age limit for children who are permanently and totally disabled.
Residency: Must have lived with you in the United States for more than half the year.
Support: The child cannot file a joint return for the year (except to claim a refund).
Pennsylvania’s Department of Revenue launched an online calculator to help you estimate your credit. Here’s how to use it:
Before you start, you’ll need:
Visit the official Pennsylvania Department of Revenue website at www.pa.gov and search for “Working Pennsylvanians Tax Credit” or go directly to their WPTC page.
The calculator will ask for:
The calculator will show you both your estimated federal EITC and your Pennsylvania state credit (which is 10% of the federal amount).
Important note: The calculator provides an estimate only. Your actual credit will be determined when you file your official tax return. Various factors like investment income, specific deductions, or changes in your situation could affect the final amount.
The claiming process is designed to be automatic and straightforward. Here’s exactly what you need to do:
Start by filing your federal Form 1040 and claiming the federal Earned Income Tax Credit. This is essential—you must claim the federal credit to receive the state credit.
You can file your federal return through:
Next, file your state return. The easiest and fastest method is to file both returns online simultaneously through myPATH, Pennsylvania’s free online tax filing system.
When you file electronically:
If you filed your federal return separately or through different software, you’ll need to:
Once processed, if your WPTC exceeds your Pennsylvania tax liability, you’ll receive a refund for the difference.
Choose direct deposit for the fastest refund—typically arriving within a few weeks of filing. Paper checks take significantly longer, often 6-8 weeks or more.
Note: By law, the IRS must hold refunds that include EITC until mid-February to prevent fraud. This affects the timing of both your federal and state refunds.
If you prefer to file by mail:
Paper filing significantly delays processing—expect 8-12 weeks for refunds.
Free tax preparation assistance is available through:
VITA (Volunteer Income Tax Assistance): Free tax help for people earning less than $67,000, persons with disabilities, and limited English speakers. Find locations at IRS.gov/VITA.
TCE (Tax Counseling for the Elderly): Free tax help for taxpayers age 60 and older. Find locations at IRS.gov/TCE.
Pennsylvania Department of Revenue District Offices: In-person assistance available. Call 717-787-8201 for locations and appointments.
United Way and Just Harvest: Local nonprofits operating free tax preparation sites across Pennsylvania, especially in Pittsburgh and surrounding areas.
Avoid these frequent errors:
You must claim the federal credit before receiving the state credit. Many eligible workers leave money on the table by not claiming the federal EITC because they don’t realize they qualify or find it confusing.
Married couples must file jointly to claim EITC (with rare exceptions). If you’re married but file separately, you’ll be disqualified.
All family members claimed for the credit must have valid SSNs. ITINs (Individual Taxpayer Identification Numbers) do not qualify.
If you have more than $11,950 in investment income for 2025, you’re disqualified regardless of your earned income. Track dividends, interest, and capital gains carefully.
If the IRS or state questions your claim, you’ll need proof of income (W-2s, 1099s) and documentation for qualifying children (birth certificates, school records, medical records).
Use tax software or a tax professional to minimize calculation mistakes. A single math error can delay your entire refund for months.
Some Pennsylvania workers file federal returns but skip the state return, thinking they don’t owe state taxes. You must file PA-40 to receive the WPTC, even if you don’t owe state taxes.
The Working Pennsylvanians Tax Credit will deliver $193 million in relief to 940,000 workers across the state. For many families, this represents a week’s worth of groceries, a month of utilities, or emergency car repairs—expenses that can make or break a household budget.
Research consistently shows that earned income tax credits are among the most effective anti-poverty programs. They reward work, support families, and inject money directly into local economies.
In Philadelphia County alone, approximately 175,000 residents will benefit, receiving about $41.7 million in combined relief.
Across United Way’s five-county southwestern Pennsylvania region, an estimated 104,000 households claimed the federal EITC in 2022. The new state credit is projected to add $22.85 million in refunds for these households—an average of $220 per family.
For working Pennsylvanians living paycheck to paycheck—and in some cases, below the poverty line while still paying state income tax—this credit offers meaningful relief.
The EITC is based on your annual income. If you lose a job, take a pay cut, or have reduced hours, you might newly qualify. Conversely, a raise or new job could push you over the limit.
Check your eligibility early in the year and again before filing to ensure you’re making the most of this credit.
The Working Pennsylvanians Tax Credit begins with the 2025 tax year (filed in 2026). You cannot claim it for 2024 or earlier years since it didn’t exist.
However, if you didn’t claim the federal EITC in previous years but were eligible, you can file amended returns (Form 1040-X) for up to three prior years to claim those federal credits retroactively.
Self-employment income counts as earned income for EITC purposes. You can claim both the federal and state credits if you meet all other requirements. Keep detailed records of your business income and expenses to substantiate your claims.
Special rules apply for military personnel and clergy members. Certain types of income (like combat pay) can be included or excluded strategically to maximize your credit. Consult with a tax professional familiar with these special situations.
Tax credits like EITC and WPTC typically don’t count as income for other benefit programs like SNAP (food stamps), Medicaid, or housing assistance.
However, large refunds that remain in bank accounts could affect asset tests for some programs. Spend or save refunds strategically if you’re near asset limits for other benefits.
The current credit equals 10% of the federal amount. This represents a compromise from the original proposal, which called for 30%. Advocates continue pushing for an increased percentage in future budgets, which would significantly expand the relief available to working families.
State officials emphasize that the credit will be automatically calculated for eligible filers, making it one of the most accessible tax benefits in Pennsylvania’s system.
Here’s your step-by-step checklist to ensure you receive your Working Pennsylvanians Tax Credit:
Before Tax Season:
During Tax Season (January-April 2026):
After Filing:
Pennsylvania Department of Revenue:
IRS Resources:
Local Assistance:
The Working Pennsylvanians Tax Credit is a game-changer for nearly one million households across the state. If you’re earning a modest income and working hard to support yourself or your family, you could receive up to $805 in additional tax relief—money that’s automatically calculated when you file your taxes.
Don’t leave this money on the table. Use the calculator to estimate your credit, gather your documents, and file electronically when tax season opens in January 2026. For most eligible workers, claiming this credit requires no extra steps beyond filing their regular tax returns.
This is money you’ve earned. Make sure you claim it.
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