New Tax Credit for Pennsylvania Families
As tax season kicks into gear, officials and advocates are highlighting a new state tax credit expected to provide substantial financial relief for working families this year.
Starting in 2026, nearly a million residents in Pennsylvania will qualify for the Working Pennsylvania Tax Credit. This initiative, recently enacted as part of the national budget at the end of last year, aims to alleviate some financial pressures.
The Working Pennsylvania Tax Credit is modeled after the federal Earned Income Tax Credit, which is recognized as one of the largest anti-poverty measures in the U.S.
“This specific deduction will lessen the tax burden for many working Pennsylvanians, especially those living paycheck to paycheck,” stated Christy Wayland Stagno, head of the Free Tax Prep Coalition at Just Harvest, a local anti-hunger organization. She noted that anyone below the poverty line is still liable for income taxes.
The coalition, spearheaded by the United Way of Southwestern Pennsylvania and Just Harvest, provides free tax preparation services across several counties, including Allegheny, Westmoreland, Fayette, Washington, and Greene.
Taxpayers eligible for the federal credit will automatically qualify for a state credit equal to 10% of the federal amount, with a maximum state credit of $805. The actual amount received depends on income and the number of dependents.
However, delays in last year’s state budget agreement mean that this credit won’t be applicable until 2025, so it won’t appear on the Pennsylvania income tax return form PA-40.
Eligible individuals will get their refunds accompanied by a letter explaining the credit, according to Weyland Stagno.
During a recent visit to volunteer tax assistance sites at Just Harvest’s office in Pittsburgh, state Sen. Lindsey Williams and state Rep. Emily Kinkead shared that they often direct voters to the free tax help available through Just Harvest, United Way, and similar programs.
State Senate Minority Leader Jay Costa mentioned that some lawmakers are considering increasing the state credit beyond the current 10%, although this must be weighed against potential revenue loss for the state.
“That’s been the balancing act, our main challenge this past year,” Costa remarked, adding that the credit, which will assist around 1 million residents, is significant.
The Southside location is supported by both United Way and the IRS, using trained volunteers to assist taxpayers.
Access to free tax preparation services can also open doors to other benefits for which individuals may qualify.
“It’s not solely about taxes; it’s interconnected with many other aspects,” said Dan McCarthy, an organizer at Just Harvest.
To arrange free tax assistance, you can click here or call the United Way’s 2-1-1 helpline. To qualify, individual income must be under $50,000, or $70,000 for households with two or more people.
