PA-40 Schedule SP: 2025 PA Schedule SP - Special Tax Forgiveness (PA-40 SP) (2025)
Pennsylvania · Pennsylvania DOR · Used for tax years 2025
PA-40 Schedule SP is used to claim Pennsylvania’s Tax Forgiveness Credit, which can reduce all or part of an eligible taxpayer’s Pennsylvania personal income tax liability. It reports filing status, dependent children, and eligibility income and calculates the credit.
Who files this form
Complete and include PA-40 Schedule SP with your original 2025 PA-40 if you claim the Tax Forgiveness Credit on Line 21. This credit can reduce all or part of your Pennsylvania personal income tax liability.
Eligibility depends on being subject to Pennsylvania personal income tax, meeting the eligibility income requirements, and your dependency status. If someone claims you as a dependent on a federal return, you cannot claim Tax Forgiveness unless that taxpayer also qualifies.
Nonresidents and part-year residents may qualify, but must include the required income earned both inside and outside Pennsylvania.
If you later discover changes to income or information in Sections I, II, or III, include an amended Schedule SP with Schedule PA-40 X. Explain changes affecting the credit in Section III on page 2 of Schedule PA-40 X.
What you'll need
Have these returns and details available:
- Your 2025 PA-40, including taxable income on Line 9, tax liability on Line 12, and any resident credit on Line 22.
- Your name and Social Security number. Include your spouse’s name and Social Security number even if filing separately.
- Each dependent child’s name, age, relationship to you, and Social Security number.
- Amounts for the taxable and nontaxable income listed in Section III. Married claimants must include both spouses’ eligibility income.
- The applicable Eligibility Income Table for your filing status and number of dependent children.
Additional attachments may apply:
- First-time Schedule SP filers, or taxpayers claiming a new dependent for the first time, should include copies of birth certificates and Social Security cards for all dependents listed in Section II.
- Include pages one and two of your federal income tax return if claiming an adult child, adopted child, foster child, or child with a different last name from yours.
- Nonresidents and part-year residents filing a paper PA-40 must include pages one and two of their federal return.
- If you have more than nine dependent children, include additional schedules.
- If claiming a foster child without foster-care payments or without placement by the foster-care program, submit a written explanation of why there is no foster-parent income and explain the child’s relationship to you.
How to file
Submit Schedule SP with your PA-40 when claiming the credit. The supplied text does not give a mailing address or e-file directions.
- Answer the eligibility questions and select your filing status in Section I.
- List qualifying dependent children in Section II. Enter the total on PA-40, Line 19b.
- Complete eligibility income in Section III. Use Column A if unmarried or married filing jointly. Married taxpayers filing separately use Columns B and C and combine both spouses’ eligibility income.
- Use the appropriate Eligibility Income Table and your dependent count to find the forgiveness percentage. Enter its decimal equivalent on Line 15.
- In Section IV, subtract the resident credit from your PA tax liability, then multiply the result by the decimal on Line 15. Enter the credit on Schedule SP, Line 16, and PA-40, Line 21.
Report whole dollars only: drop amounts below $0.50 and round amounts of $0.50 or more up to the next dollar.
Married claimants filing separate PA returns must report the same Schedule SP information, including dependents and joint eligibility income, certify that information, and include a copy with each PA-40.
Common mistakes
- Leaving out a spouse’s income or Social Security number. Married claimants must report joint eligibility income and include the spouse’s Social Security number even when filing separately. The instructions say there is no advantage to filing separately for this credit.
- Claiming the credit when your dependency answers do not allow it. If you answer “Yes” to being a dependent and “No” to whether the taxpayer claiming you qualifies, you cannot claim Tax Forgiveness.
- Claiming children not claimed on your federal return. Only claim children you claimed as dependents on your 2025 federal income tax return.
- Missing a required federal-return attachment. Include pages one and two when claiming an adult, adopted, or foster child, or a child whose last name differs from yours.
- Omitting certain out-of-state income. Residents of reciprocal states with Pennsylvania-taxable income other than compensation must include their nontaxable out-of-state income and compensation exempt from Pennsylvania tax on Line 6.
Questions people ask
Can Tax Forgiveness help if I have not paid Pennsylvania income tax?
Yes. It can forgive eligible taxpayers’ liabilities even if they have not paid Pennsylvania personal income tax. It can also provide a state tax refund to some taxpayers.
Can a full-time student claimed by their parents qualify?
Only if the parents are eligible for Tax Forgiveness. The student must file their own tax return and Schedule SP.
Can an adult child count as a dependent?
Yes. A qualifying adult child claimed as a dependent on your federal return can count. No other adult can be claimed as a dependent on Schedule SP, even if claimed on a federal return.
Is eligibility income the same as Pennsylvania taxable income?
No. Eligibility income includes Pennsylvania taxable income plus the nontaxable income required on Lines 2 through 10. If nothing must be reported on those lines, enter zero.
Do I include Social Security benefits on Line 10?
No. The instructions exclude Social Security and Railroad Retirement benefits from Line 10 when calculating eligibility income.