Harrisburg, PA —The Shapiro Administration is encouraging Pennsylvania employers to take advantage of two tax credit programs that can provide a meaningful way for employers to support their employees. The programs offer employers a break on their state taxes when they provide their employees with qualifying financial support to cover child care, educational costs, and expenses related to a disability.
The Employer Child Care Contribution Tax Credit and the 529 Savings Account Employer Matching Contribution Tax Credit are two programs that are now being offered in Pennsylvania thanks to legislation that was signed into law by Governor Josh Shapiro. Both are designed to encourage PA employers to provide support to their employees at a time when rising costs are a major concern for many families across Pennsylvania. The Governor has made cutting taxes and lowering costs for Pennsylvanians a top priority — cutting taxes seven times since taking office and putting money back in the pockets of seniors, families, and businesses.
“From the day he took office, Governor Shapiro has been working to create a more affordable Pennsylvania for hardworking Pennsylvanians across the Commonwealth. Business owners can play an important role in this effort and support their employees by participating in these tax credit programs,” said Secretary of Revenue Pat Browne. “We strongly encourage all qualified business owners to map out a plan to take advantage of these programs. They both create a win-win scenario where employers can support their workers and create competitive employment packages while also taking advantage of tax benefits.”
How the Programs Work
The Employer Child Care Contribution Tax Credit Program encourages Pennsylvania businesses to support their employees who have children in eligible child care or early learning programs. Employers can receive a tax credit equal to 30% of their employees’ eligible child care costs (with a maximum annual contribution of $500 per employee).
Meanwhile, the 529 Savings Account Employer Matching Contribution Tax Credit gives employers the opportunity to support their employees who may be saving for education or disability-related expenses. The program offers a tax credit to employers who contribute matching funds to an employee’s PA 529 account or PA ABLE account. The PA 529 program provides a tax advantaged way for families to save for education, from K-12 to college and career training programs. The PA ABLE program is a state-offered program that gives individuals with qualifying disabilities a tax-advantaged way to save or invest without impacting their government benefits.
For employers participating in the 529 Account Employer Matching Contribution Tax Credit, the tax credit is worth 25% of what the employer contributes (with a maximum annual contribution of $500 per employee).
In order to qualify for either program, employers must:
- Be a Pennsylvania business subject to state taxes, such as Personal Income Tax, Corporate Net Income Tax, or other applicable business taxes.
- Employ at least one person and withhold PA income tax from wages.
- Offer the contribution benefit to all employees.
- Keep basic documentation, such as proof of contributions and signed opt-in/opt-out forms
- Be in good standing with state taxes.
How to Apply
Employers looking to take advantage of the Employer Child Care Contribution Tax Credit and 529 Savings Account Employer Matching Contribution Tax Credit are required to keep records, such as bank statements and provider receipts, to confirm their contributions.
That documentation is submitted as part of their applications online through myPATH, the online tax system for the Department of Revenue. The annual application window opens on October 1 and closes on January 31 the following year. Employers looking to take advantage of either credit for the 2026 calendar year would submit their applications and supporting documentation within the 2026 application period starting October 1, 2026 through January 31, 2027.
Upon logging into myPATH, the applicant must select the link for the application, under the “Applications” tile. They’ll then be guided through the step-by-step online application.