HARRISBURG, PA — A new state tax credit aimed at easing financial pressure on low- to moderate-income workers is now law, following the governor’s signing of the 2025–26 state budget and accompanying code bills. The measure establishes the Working Pennsylvanians Tax Credit, a proposal authored by state Rep. Christina Sappey, D-Chester.
The credit is expected to reach nearly 1 million working households across Pennsylvania by offering a state-level benefit tied directly to the federal Earned Income Tax Credit (EITC). Any household that qualifies for the federal program will now automatically qualify for the state version, equal to 10% of the federal credit amount. Depending on income and family size, eligible Pennsylvanians could see between $400 and more than $1,000 returned on their state personal income taxes.
Sappey said the initiative targets families earning modest wages who are struggling to keep pace with rising costs. “Many are dual-income households juggling rent or mortgage payments, child care, health care and everyday essentials,” she said. “When those basic costs outpace paychecks, families struggle — and our entire economy feels the impact.”
She emphasized that the goal is to support working families without pushing them into eligibility for other public assistance programs. Sappey also cited data from other states with similar credits, arguing that the policy stimulates local economies and reduces strain on social safety nets. “For every dollar returned to families through this state tax credit, Pennsylvania will receive $4 back in economic growth and save $3 on social spending,” she said.
The federal EITC is considered one of the nation’s most effective anti-poverty tools. For the 2023 tax year, about 802,000 Pennsylvania households received more than $2 billion through the federal program, with an average benefit of $2,600. With the new addition, Pennsylvania becomes the 32nd state to implement a state-level complement to the federal credit.
The Working Pennsylvanians Tax Credit was enacted through the Fiscal Code (Act 45 of 2025), signed Wednesday alongside the budget and related legislation. Lawmakers say the program is designed to help stabilize the workforce, boost consumer spending, and bolster the state’s middle class at a time of rising household expenses and uneven wage growth.
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