Unlocking Economic Opportunity with WPTC
New tax credits look to help working poor, bridge gaps in inequalities
Tax season is underway and for the first time, nearly a million Pennsylvanians will receive a new state tax credit when they file their returns this month. The Working Pennsylvanians Tax Credit (WPTC) signed into law last year is expected to deliver $193 million in tax savings to about 940,000 Pennsylvanians – up to $805 per household.
The credit, modeled after the federal Earned Income Tax Credit (EITC), is something that many other states have previously adopted.
This isn't just about tax policy, though. It's about who has historically been locked out of economic opportunity – and whether a tax credit can correct decades of structural inequality.
"There are about 34,000 working households in Erie County that are income-constrained, so it's a large group," explained Kim McCaslin, chief communications officer for the Greater Erie Community Action Committee (GECAC). GECAC is Erie County's frontline defense against poverty, offering programs and services designed to meet the needs of those struggling financially.
About 15 percent of county residents are considered impoverished by the federal poverty guidelines, but many more struggle with earning a livable wage. GECAC serves 22,000 clients each year, tackling prominent issues like food insecurity and housing and utility affordability. For those residents, how much of a difference could the new tax credit actually make?
"It's huge. It's the difference between keeping your job, feeding your family, and having a roof over your head," McCaslin said.
She said that many of the programs GECAC offers involve teaching people how to properly manage their money and to connect them with resources like rental and utility assistance. For many families, even if they can get by, they can be easily broken by a medical emergency or even a flat tire.
"It gives people access to the things that they need," she said. "If they have an illness, if they have a leak in their roof, just having that little bit of money that they can specifically allocate to their specific need – because every family is different, every emergency is different – so it is a huge bonus in Pennsylvania for our families to be able to have access to that bit of money."
But the credit's impact isn't evenly distributed across Erie County's workforce. Although the policy itself is neutral, Institute of Taxation and Economic Policy research shows that tax credits like these disproportionately benefit Black and Hispanic workers who are overrepresented in low-wage jobs due to historical inequities in the labor market.
An analysis of the EITC credit – which mirrors the WPTC – by the Urban Institute showed that the EITC reduced overall income inequality by 5 to 10 percent over 40 years.
Although it's effective in reducing gaps for middle- to lower-income households, the program is less effective at closing racial income gaps for the lowest percentile, and in some cases, may even widen them.
The reason: because the tax credit is conditioned on household employment and work hours, "benefits to Black workers and families may be tempered by persistent structural barriers to employment and labor market discrimination."
The Shapiro administration acknowledged those limitations and said the tax credit is part of a broader effort.
"Gov. Shapiro recognizes that tax credits alone cannot eliminate every structural barrier workers face," said Jeffrey Johnson, director of communications for the Pennsylvania Department of Revenue. "That's why the WPTC is not a standalone solution, but part of a broader strategy to lower costs, raise wages, and expand opportunity."
He said that the administration is pairing the WPTC with historic investments in education, workforce development, child care, and job training – while also working alongside federally-funded programs like SNAP, Medicaid, and LIHEAP, "which remain critical to supporting families and helping workers stay connected to the labor force."
Alongside the WPTC, the administration expanded the Child and Dependent Care Enhancement Tax Credit to triple the amount or relief available through the credit.
Eligible families can receive $600 to $2,100 depending on income level and number of dependents.
Johnson pointed out other programs like efforts to support Black-owned and Latino-owned businesses in the procurement space and through the Historically Disadvantaged Business Assistance Program (HDBA).
Additionally, in his 2026-27 budget proposal on Wednesday, Shapiro asked the General Assembly to raise the state's minimum wage to $15 an hour in an effort to strengthen earnings for low-wage workers.
Beyond structural employment barriers, there's another obstacle: awareness. Many eligible workers simply don't know the credit exists or don't know how to claim it.
In Erie County, GECAC includes financial resources for its clients and is looking ahead to host a Volunteer Income Tax Assistance (VITA) program next year where volunteers certified in tax code assist people in filing their taxes and getting the proper refunds, all for free. Since United Way stopped its in-person VITA program a couple of years ago, there have been other agencies trying to fill the gaps.
Erie Federal Credit Union is one of those agencies who opened its doors for people to access the VITA program. Cheryl Kindle, vice president of member solutions, said that without the VITA service, people may resort to going to a financial service that charges upwards of $400 even if it's just a simple return.
At Erie FCU, they mostly see single moms, working parents and couples, and older adults. Many of them don't even know what credits are available to them as the tax law is constantly changing.
"That's one of the reasons we offer this service, even though some people could do their taxes online, they might not know all these different things they're eligible for," Kindle said.
For those who are not members of the Erie FCU, United Way does offer its VITA program virtually at MyFreeTaxes.com for those who make $69,000 or less and would like a certified volunteer to file their taxes.
This tax credit may not be a life-changing amount of money, but it's a step toward equality and economic stability for many Erie County residents. Along with the other nonprofits and support in place, the tax credit is a reminder of how powerful resources can be when people properly know about and utilize them. Likewise, it's a reminder of the work that still needs done.
"This is just one piece of the puzzle," McCaslin said, "that is going to really help families keep their heads above water."
Chloe Forbes is a local journalist. Reach her at chloeforbes14@gmail.com
