Pennsylvania guide

Pennsylvania Tax Forgiveness: does your family qualify?

Tax Forgiveness can reduce your Pennsylvania income tax to zero if your family's eligibility income is under the limit. Here is how the limits work, with two worked examples.

By Claire Dunmore · Updated October 2026 · General information, not tax advice

Single, full forgiveness

$6,500

Eligibility income, before dependents.

Married, full forgiveness

$13,000

Eligibility income, before dependents.

Per dependent child

$9,500

Added to the limit for each child.

Each step

10%

Forgiveness drops 10 points per $250 over.

A couple sorting tax paperwork into folders at their kitchen table while their child does homework

What Tax Forgiveness is

Tax Forgiveness is a Pennsylvania credit claimed on Schedule SP with your PA-40. For families under the income limits it can reduce Pennsylvania income tax, normally a flat 3.07%, all the way to zero.

How the limits work

Full forgiveness applies up to an eligibility income of $6,500 for a single person or $13,000 for a married couple, plus $9,500 for each dependent child. Above that, forgiveness drops by 10 percentage points for every $250 of extra income, down to 10% at the top of the table.

  • Single, no dependents: full forgiveness up to $6,500.
  • Married, no dependents: full forgiveness up to $13,000.
  • Each dependent child adds $9,500 to the limit.

Two worked examples

A married couple with two children has full forgiveness up to $32,000 of eligibility income ($13,000 plus two times $9,500), and some forgiveness up to $34,250. A single parent with two children has some forgiveness up to $27,750.

Eligibility income is not taxable income

Eligibility income counts more than your taxable income does, so a family with a small tax bill can still be over the limit. We work it out from your actual papers rather than estimate it.

Children with their own income

A dependent child with Pennsylvania income over $33 files their own PA return. We prepare it alongside the family return so the two agree.

The credits beside it

Tax Forgiveness sits beside two newer Pennsylvania credits: the Working Pennsylvanians Tax Credit, worth 10% of your federal earned income credit up to $805 from tax year 2025, and the child and dependent care credit, now 100% of the federal amount. We check all three on every family return.

Sources

Figures checked against the sources above in October 2026. Rules and rates change; confirm with the agency or a preparer before you act. This guide is general information, not tax or legal advice.

Up one level Families Every credit checked on your family return.

Next step

Let a preparer check it for you.

Book a 30-minute sit-down and we will check Tax Forgiveness and the credits beside it against your actual papers.

Book a 30-minute sit-down

or call (412) 555-0163

Call (412) 555-0163 Book a sit-down