The Pennsylvania Tax Forgiveness Credit is a credit that may reduce or eliminate Pennsylvania income tax for eligible taxpayers. Eligibility for the credit is based on factors such as Eligibility Income, family size, and filing status.
Pennsylvania Return > Credits > Schedule SP (Tax Forgiveness Credit)
The credit is intended to provide tax relief to taxpayers with lower incomes and may reduce the amount of tax owed or increase a taxpayer's refund.
Who May Qualify?
You may qualify for the Pennsylvania Tax Forgiveness Credit if:
- Your Eligibility Income falls within Pennsylvania's Tax Forgiveness guidelines.
- You meet the applicable filing status requirements.
- You meet the dependent and family size requirements.
Eligibility is determined using Pennsylvania's Tax Forgiveness calculations and income limits.
How Is the Credit Calculated?
Pennsylvania calculates the Tax Forgiveness Credit using:
- Eligibility Income
- Filing status
- Family size
- Pennsylvania tax liability
Depending on the results of the calculation, taxpayers may qualify for:
- Full Tax Forgiveness
- Partial Tax Forgiveness
- No Tax Forgiveness
What Is Eligibility Income?
Pennsylvania uses Eligibility Income rather than Pennsylvania taxable income to determine eligibility for Tax Forgiveness.
Eligibility Income may include both taxable and certain nontaxable income received during the year.
Because Eligibility Income includes income that may not be taxable on the Pennsylvania return, it may differ from Pennsylvania taxable income.
How Does the Credit Affect My Return?
The Pennsylvania Tax Forgiveness Credit may:
- Eliminate Pennsylvania income tax.
- Reduce Pennsylvania income tax.
- Increase a Pennsylvania refund.
- Reduce the amount owed with the return.
Important Information
- Tax Forgiveness is claimed using Schedule SP.
- Eligibility is based on Eligibility Income, filing status, and family size.
- Completing Schedule SP does not guarantee eligibility for the credit.
- Taxpayers with qualifying dependents may qualify at higher income levels than taxpayers without dependents.
- Eligibility Income may include certain taxable and nontaxable income.