Everything You Need to Know About the Working Pennsylvanians Tax Credit
Pennsylvania residents are seeing a significant new way to lower their tax bills. Governor Josh Shapiro signed the Working Pennsylvanians Tax Credit (WPTC) into law on November 12, 2025, as part of the 2025-26 budget. This initiative is designed to provide direct financial relief to low-to-moderate income working families across the Commonwealth.
Beginning with the 2026 tax season, the credit aims to deliver $193 million in total relief to approximately 940,000 eligible working Pennsylvanians.
What is the Working Pennsylvanians Tax Credit?
The WPTC is a state-level tax credit modeled after the federal Earned Income Tax Credit (EITC). Essentially, the state credit equals 10% of a taxpayer’s federal EITC. If you qualify for the federal credit, you automatically qualify for the state credit, which helps either lower the total tax you owe or increase your final refund.
The maximum amount a taxpayer can receive from the WPTC is $805. The actual amount varies based on the taxpayer’s filing status, annual income, and number of dependents.
Example of Potential Savings
To put this into perspective, a family where the father earns approximately $40,000 a year and the mother stays home with two children could receive $514 back on their state taxes through this program.
Who is Eligible?
You may qualify for the Working Pennsylvanians Tax Credit if you meet the following three criteria:
- You have earned income in Pennsylvania.
- You qualify for the federal Earned Income Tax Credit (EITC).
- You file both the federal Form 1040 and the PA-40 state tax return.
Because the WPTC is tied directly to the federal EITC, qualifying for the federal benefit is the primary trigger for state eligibility.
How to Claim Your Credit
Claiming the WPTC is a straightforward process integrated into your standard tax filing:
- File Your Federal Return: Complete your federal Form 1040 and claim the EITC.
- File Your State Return: Complete your PA-40 state tax return. Most tax software programs will automatically prompt you to enter your federal EITC amount to calculate the state credit.
The Impact on Pennsylvania Families
State officials describe this credit as a critical tool for promoting equity and fairness in the tax system. According to Revenue Secretary Pat Browne, it is the most impactful change to the system since the personal income tax was enacted over 50 years ago.
The financial relief provided by the WPTC can help working families cover essential costs, such as:
- Necessary car repairs to maintain employment.
- Security deposits for larger, more supportive housing.
- Debt reduction.
- Child care expenses.
The program has seen rapid early adoption. nearly 500,000 claims have already been approved, returning over $125 million to taxpayers.
Key Takeaways: WPTC at a Glance
- Maximum Credit: $805
- Calculation: 10% of your federal EITC
- Total Program Budget: $193 million
- Eligibility: Must qualify for federal EITC and file a PA-40
- Effective Date: Created in the 2025-26 budget for the 2026 tax season
Frequently Asked Questions
Do I need to apply separately for the WPTC?
No. You claim the credit by filing your federal Form 1040 and your PA-40 state tax return.
Is the credit guaranteed?
While qualifying for the federal EITC automatically qualifies you for the WPTC, the final amount is determined when you file your return. Other factors may affect your final eligibility and the total amount you receive.
How many people are eligible?
The Governor’s office estimates that approximately 940,000 Pennsylvanians are eligible for this credit.
Looking Ahead
The Working Pennsylvanians Tax Credit represents a rare bipartisan agreement on tax policy, ending decades of discussion regarding similar proposals. As the tax season progresses, state officials continue to urge eligible low-income residents to file their returns to ensure they receive this direct financial relief.