New Income Tax Credit Announced for Pennsylvania Taxpayers
In mid-November 2025, Pennsylvania Governor Josh Shapiro signed the $50.1 billion state budget, which prioritizes tax relief for working families, expanded school funding, and strengthening of the workforce. One new item introduced is an earned income tax credit that will provide over $193 million in tax relief for working families in Pennsylvania.
The new income tax credit, called Working Pennsylvanians Tax Credit, will give families an earned income tax credit at the state level worth 10% of the federal credit. Almost 940,000 residents of Pennsylvania will qualify for the tax credit.
To be eligible for the credit, taxpayers are subject to certain income and dependent limits, and qualifying working families will receive up to potentially $805 in state tax relief. The credit is modeled after the federal Earned Income Tax Credit (EITC), and anyone who qualifies for and claims that credit will automatically receive the state credit.
For 2025, the federal EITC maximum credit is:
- For no children claimed: $649
- One dependent claimed: $4,328
- Two dependents claimed: $7,152
- Three dependents claimed: $8,046
The credit is based on the taxpayer’s adjusted gross income and for the federal EITC, the income must be below the following limits for those filing as single, head of household, married filing separately, or widowed:
- For no children claimed: $19,104
- One dependent claimed: $50,434
- Two dependents claimed: $57,310
- Three dependents claimed: $61,555
For taxpayers who are married and filing jointly, the maximum adjusted gross income limit is:
- For no children claimed: $26,214
- One dependent claimed: $57,554
- Two dependents claimed: $64,430
- Three dependents claimed: $68,675
Other eligibility requirements include having investment income under $11,950, a valid Social Security number, and being a U.S. citizen or legal resident for the whole year.
The new budget takes effect immediately for the 2025-26 fiscal year, allowing families to begin claiming the tax credit for 2025 when filing their taxes in 2026.
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