Will Pennsylvania Tax Breaks Help Replace Lost Residents?

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. 

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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.