Pennsylvania Boosts Child Tax Credit for 200,000+ Families—Discover the Increased Benefits

The previous week saw Pennsylvania Governor Josh Shapiro enact legislation, approving essential financial support for indigent defense, environmental restoration, and student mental health. 

Moreover, he endorsed a significant extension of the state’s Child and Dependent Care Enhancement Tax Credit, providing substantial assistance to working families in Pennsylvania for managing child care expenses.

Eligibility  for the Pennsylvania Child and Dependent Care Tax Credit

As per the information provided on the Pennsylvania Pressroom site, individuals are eligible to claim this credit on their PA Personal Income Tax Return (PA-40) if they have incurred care-related expenses for:

• A dependent child under the age of 13.
• A spouse who, due to physical or mental incapacity, was unable to provide self-care and resided with the claimant for more than half of the year.
• An individual who, due to physical or mental incapacity, was unable to provide self-care, lived with the claimant for more than half of the year, and either qualified as a dependent or could have qualified as a dependent, except for earning a gross income of $4,400 or more, filing a joint return, or being eligible to be claimed as a dependent on another taxpayer’s return

Increased Credit Limits to $2,100 from Previous Maximum of $1,200

It is crucial to highlight that the Pennsylvania refundable credit is determined by and is equivalent to 100% of the federal Child and Dependent Care Tax Credit. 

To qualify for the recently enhanced state tax credit, Pennsylvania taxpayers must receive the federal credit.

As outlined by the Pennsylvania Department of Revenue, the credit amount varies from $600 to $2,100, considering the applicant’s income level and the number of dependents. 

This represents an increase from the previous maximum of $1,200.

• The maximum credit is set at $1,050 for one child and $2,100 for two or more children. 
• The credit limit decreases as income levels rise.
• The minimum credit stands at $600 for one child and $1,200 for two or more children.