Working Pennsylvanians are about to get a tax break. Here’s what that means

Working Pennsylvanians can expect some tax relief once they file their taxes after the New Year with the Working Pennsylvanians Tax Credit.

Modeled after the federal Earned Income Tax Credit (EITC), Gov. Josh Shapiro’s recently-signed budget includes the creation of the Working Pennsylvanians Tax Credit, which is projected to provide $193 million in tax relief for close to a million Pennsylvanians. 

Under this new program, residents who benefit from the EITC will receive an additional 10% tax credit from the commonwealth in order to combat poverty. Pennsylvania House Democrats passed similar legislation earlier this year with overwhelming bipartisan support, where residents would have received a 30% tax credit. 

“ This tax credit is a percentage of the existing earned income tax credit at the federal level,” Shapiro said during a press conference at Widener University on Monday. “If you get the federal break, you’re now going to get the state tax break.” 

“Let me put this into some real perspective on what it means for Pennsylvanians who are working and who are now gonna get some additional relief,” Shapiro added. “That single mom who’s raising three kids, who’s making about $25,000 a year as a waitress, she can get $770 back on her state taxes on top of whatever relief she was gonna get from the federal government.”

Shapiro was joined by Pennsylvania House Speaker Joanna McClinton, leaders from the United Way, and elected officials at Widener University to celebrate the passage of the budget and the creation of the tax credit. 

The Working Pennsylvanians Tax Credit, which will be made available to those who qualify once they file their taxes next year, is designed to help people who are Asset Limited, Constrained Income, Employed (ALICE) under United Way’s guidelines. 

According to the United Way, ALICE individuals earn incomes above the federal poverty level but are not making enough to afford basic expenses in their home county. In 2023, according to the FPL, 12% of Pennsylvanians were financially insecure while an additional 28% of households met the ALICE criteria.  

“ Moms are enormously grateful for Governor Shapiro’s leadership, fighting for a state budget that supports working families, and we know this new credit will boost families, kids, communities, and our economy,” Karen Showalter, a senior campaign manager with MomsRising, said during the press conference. 

“ We know that this will make a difference because we hear it from members every day in every corner of the state who need the relief this tax credit provides. So many of our members tell us that even though they’re working hard and caring for their families, they still can’t get ahead financially.”