HARRISBURG, PA — Pennsylvania employers can now receive state tax credits for helping workers cover child care, education, and disability-related expenses under two newly available programs.
What This Means for You
- Employer-Supported Savings: Workers may receive help paying for child care or saving for education and disability expenses.
- Tax Incentives for Businesses: Employers can reduce state taxes by contributing to employee benefits.
- Expanded Workplace Benefits: Programs are designed to make jobs more competitive while easing financial pressure on families.
The programs—the Employer Child Care Contribution Tax Credit and the 529 Savings Account Employer Matching Contribution Tax Credit—offer financial incentives for businesses that provide direct support to employees.
A tax credit reduces the amount of taxes a business owes to the state, effectively reimbursing part of what the employer contributes toward employee benefits.
How the Programs Work
The Employer Child Care Contribution Tax Credit allows businesses to receive a credit equal to 30 percent of what they contribute toward an employee’s child care costs, up to $500 per employee annually.
The 529 Savings Account Employer Matching Contribution Tax Credit provides a credit equal to 25 percent of employer contributions to employee savings accounts, also capped at $500 per employee.
These savings accounts include PA 529 accounts, which help families save for education expenses from kindergarten through college or career training, and PA ABLE accounts, which allow individuals with qualifying disabilities to save money without affecting eligibility for certain government benefits.
Eligibility Requirements
To qualify for either tax credit, employers must meet several requirements:
- Be a Pennsylvania business subject to state taxes
- Employ at least one worker and withhold state income tax
- Offer the benefit to all employees
- Maintain documentation of contributions and employee participation
- Be in good standing with state tax obligations
Application Process and Timeline
Employers must apply through myPATH, the Department of Revenue’s online tax system, and submit documentation such as bank records and receipts to verify contributions.
The annual application window opens October 1 and closes January 31 of the following year.
For example, employers seeking credits for the 2026 calendar year must apply between October 1, 2026, and January 31, 2027.
State Goals and Next Steps
State officials said the programs are intended to address rising costs for families while encouraging employers to offer additional financial support.
“Business owners can play an important role in this effort and support their employees by participating in these tax credit programs,” said Revenue Secretary Pat Browne. “They both create a win-win scenario where employers can support their workers and create competitive employment packages while also taking advantage of tax benefits.”
Officials are encouraging eligible businesses to evaluate participation and prepare documentation ahead of the application period.
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