2025-2026 PA State Budget Recap: Celebrating Wins and Continuing the Fight for Families and Children
Overview
In mid-November, Pennsylvania reached a final state budget for the 2025-26 fiscal year, totaling $50.1 billion, a 4.7% increase from last year’s budget. As the year ends, we reflect on the investment priorities of the state, celebrate wins, and gear up to continue to advocate for budget investments to improve health outcomes for Pennsylvania families and babies.
Funding wins benefitting Pennsylvania children and families included:
- Addressing the early childcare and education workforce shortage
- Creation of the Working Pennsylvanians Tax Credit (WPTC).
Early Child Care and Education
A new budget line of $25 million was designated for the recruitment and retention of early care and education providers. Pennsylvania now joins 18 other states directly investing in recruitment and retention in this sector. Additionally, the Human Services Code codified language and appropriates to allow families to stay in the Child Care Works Program up to 300% of the Federal Poverty Line.
Pre-K Counts is receiving a $9.5 million increase rather than the $17 million increase Gov. Shapiro proposed in February.The Head Start Supplemental Assistance Program (HSSAP) received flat, or level, funding, meaning the dollar amount allocated during the previous fiscal year will remain the same in the new fiscal year. Flat funding fails to account for inflation or the rising costs of care, which can result in service cuts.
Evidence-based home visiting programs were also flat funded despite a significant unmet need for service services (only 7% of eligible pregnant people, young children, and families currently participate).
There was a total decrease of approximately $1 million for CHIP, a 1% decrease from last year’s budget even with the continued increase in CHIP enrollees.
We know that Pennsylvania families deserve investments in proven solutions for better health outcomes. Maternity Care Coalition will continue advocating fiercely for increased investments in maternal health and evidence-based home visiting.
Why the Working Pennsylvanians Tax Credit (WPTC) matters
The 2025-26 state budget includes the WPTC — a state version of the Earned Income Tax Credit (EITC) that puts more money back into the pockets of families who need it most!
Pennsylvania now joins 27 states, the District of Columbia, Guam, and Puerto Rico in establishing a state EITC. Research shows that families who receive a refundable state EITC experience healthier pregnancies, improved birth outcomes, and reduced financial stress — giving parents and babies a stronger start together.
The WPTC is anticipated to provide 940,000 Pennsylvanians with $193 million in tax relief during the forthcoming tax season. Anyone who qualifies for the federal EITC will automatically qualify for the state credit, which equals 10% of the federal credit.
MCC has long supported efforts to establish a refundable state EITC in Pennsylvania, as we recognize that economic stability directly supports family well-being. This is a meaningful first step in the continued investment in the health, stability, and future of our communities.
