Will Pennsylvania Tax Breaks Help Replace Lost Residents?
Proposed Pennsylvania tax breaks could result in big tax cuts, but if the tax breaks happen, will they be enough to help Pennsylvania replace the 40,000 residents it lost?
Hoping to attract new residents, Pennsylvania Gov. Josh Shapiro has proposed new Pennsylvania tax breaks. According to recent IRS migration data, Pennsylvania experienced a notable population decline between 2021 and 2022, in part due to high taxes. If the legislation is enacted, some Pennsylvania residents could see significant tax cuts.
“If you want to be a police officer, a teacher, or a nurse — we want you here in Pennsylvania, and the Commonwealth is going to put our money where our mouth is and have your back,” Gov. Shapiro said in a press release regarding potential tax cuts for essential workers.
The governor’s announcement related to one of the Keystone State's latest tax break proposals, which would offer an annual $2,500 tax credit to new nurses, police officers, and teachers, including those who move to Pennsylvania with a state-recognized credential.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Pennsylvania Tax Breaks for Essential Workers
If passed, the tax break for teachers, police officers, and nurses would provide a refundable tax credit of up to $2,500 for some of these workers. The tax credits would be available annually for three years. To qualify, people in these professions would need to meet one of the following criteria.
- Have obtained certification or licensure as a police officer, nurse, or teacher in Pennsylvania after January 2023.
- Move to Pennsylvania with licensure or certification (from another state) that the Pennsylvania recognizes.
This means that current Pennsylvania workers who obtained certification in prior years would not qualify for the credits.
Other Pennsylvania Tax Benefits
Currently, Pennsylvania residents pay a flat 3.7% state income tax rate, but Pennsylvania Sen. Greg Rothman (D-34) wants to eliminate the Commonwealth's personal income tax.
“For decades, Pennsylvania has experienced outmigration and brain drain, with working residents, college graduates, and businesses leaving for better opportunities, lower cost of living, and lower taxes. We now face a workforce and population crisis,” Rothman stated in a memo to other Senate members, asking them to support the effort.
If Rothman succeeds in eliminating the income tax, the Commonwealth of Pennsylvania would join nine other states that have no personal income tax.
Does PA have the Highest Taxes?
Some people may consider Pennsylvania to be a high-tax state due to generally high property taxes and high gas taxes, and data from the U.S. Census Bureau show that Pennsylvania lost more than 40,000 residents between 2021 and 2022. Only three other states experienced larger population declines during this time period. Illinois, California, and New York lost more residents than Pennsylvania, partly due to these states’ high tax burdens, based on the most recent IRS migration data.
While some Pennsylvania lawmakers hope these proposed tax breaks will address population and workforce declines, it is unclear if they will be enacted. The tax break for teachers, police officers, and nurses lacks support from state Republicans, which hold the majority in the Pennsylvania Senate, and Sen. Rothman has not yet formally introduced a bill that would eliminate Pennsylvania’s personal income tax.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.
-
How to Assess the Impact of Your Charitable Giving
Here are five simple ways to 'do this, not that' when trying to find out from a nonprofit what kind of impact your donations are having.
By Catherine Crystal Foster Published
-
How a Two-Year Installment Sale Strategy Can Save on Taxes
When selling property or other substantially appreciated asset, you could spread the taxes over two years to save big bucks. Following the rules is critical, though.
By Derek A. Miser, Investment Adviser Published