Working Pennsylvanians Tax Credit

In 2025, Pennsylvania reached a long-awaited milestone for working families with the passage of the Working Pennsylvanians Tax Credit (WPTC), a refundable state Earned Income Tax Credit set at 10% of the federal EITC. For United Way of Pennsylvania and our network of partners, this achievement reflects years of sustained advocacy, coalition-building, and a shared commitment to strengthening financial stability for ALICE households—families who work hard yet still struggle to afford basic necessities. Since 2020, UWP leaders and partners have engaged lawmakers and community voices across the Commonwealth, grounding this effort in data and lived experience that made one thing clear: a refundable credit was both overdue and essential. The bipartisan support behind the WPTC demonstrates what’s possible when policy solutions are rooted in the real needs of working people and designed to support long-term workforce and community stability.

Tax Benefits for Working Families – Key Highlights (Tax Year 2025 and Beyond)

Recent federal and state tax changes, including the Working Pennsylvanians Tax Credit, expand access to refundable credits and other tax benefits designed to support working families and strengthen financial stability. These updates highlight how tax policy can put more money back into the pockets of low- and moderate-income households, particularly ALICE families, and underscore the importance of connecting eligible Pennsylvanians to the credits they’ve earned.

Economic Growth and the Path to Financial Stability

One of the most cost-effective antipoverty policies currently implemented in the United States is the Earned Income Tax Credit (EITC). The federal earned income tax credit, or EITC, lifts 6 million people (including 3 million children) over the poverty threshold each year. Earned Income Tax Credits reduce the tax burden of low- to moderate income working individuals and households, boost the resources of near-poor households who struggle to make ends meet, such as the ALICE (Asset Limited, Income Constrained, Employed) population, and reduce the depth of poverty for many more.

What is an Earned Income Tax Credit?

The Earned Income Tax Credit (EITC) is a proven tax credit that supports working families with low to moderate incomes by reducing the amount of taxes they owe and, in some cases, providing a refund. Because the WPTC is refundable, eligible workers can receive the benefit even if they owe little or no income tax—putting cash back into household budgets to help cover basic needs.

Pennsylvania’s Working Pennsylvanians Tax Credit builds on this proven model by offering a refundable state Earned Income Tax Credit equal to 10% of the federal EITC. Any taxpayer who qualifies for the federal EITC is automatically eligible for the state credit, creating a simple and effective way to strengthen financial stability for working households across the Commonwealth.

Modeled after the federal EITC, Pennsylvania’s credit delivers meaningful economic impact. A refundable state EITC at the 10% level is estimated to generate more than $560 million annually for local economies. Research shows that investments in EITC programs not only boost household income but also drive economic growth and reduce reliance on costly social services—making the credit a smart, evidence-based policy for workers and communities alike.