The Pennsylvania Senate has passed a $50.1 billion bipartisan state budget that its Republican leaders say will support economic growth and make significant changes to the spending plan originally proposed by Governor Josh Shapiro.
Senate President Pro Tempore Kim Ward (R-39) said, “This budget took much longer than expected but ultimately Senate Republicans held the line to keep our promise to the people of Pennsylvania by not raising taxes and ensuring our state savings account – the Rainy Day Fund – was not attacked.” She added, “It is important for Pennsylvanians to know this budget is the direct result of a divided government and two very different approaches to how we govern our state and partner with the federal government. While Senate Republicans had to compromise by spending more than we would have preferred, we did achieve some significant policy wins that will give Pennsylvania families more certainty with their electricity rates by abandoning Gov. Shapiro’s carbon tax program known as RGGI, boosting job creation by helping businesses get up and running through ‘deemed approved’ permit reform for air quality general permits and specific NPDES water permit renewals and putting money back in the pockets of low-income working Pennsylvanians through a tax credit that allows Pennsylvania families to spend their money how they want on things like child care, school and food.”
Senate Majority Leader Joe Pittman (R-41) stated, “The closing of the 2025-26 state budget process marks a new beginning for this commonwealth, filled with economic growth and opportunity. This budget moves, monumentally, to increase the promise of Pennsylvania. This is a pro-family and pro-job creator plan, and we have protected taxpayers by making sure the Rainy Day Fund stays intact. Above all, we have removed the anvil of the RGGI electricity tax, which has been hanging over the heads of every consumer of electricity in this commonwealth. This budget is a product of divided government, and while it may have taken more time than any of us would have preferred, we have brought a divided government together to move our commonwealth forward.”
The approved plan reduces nearly $1.4 billion in spending from Governor Shapiro’s original proposal. It also uses about $3 billion in lapsed funding from state agencies and special funds rather than increasing taxes or drawing down on reserves.
One major change included in this year’s agreement is eliminating regulations that would have required Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI), which Republican leaders argue would have led to higher electricity costs for consumers as well as potential job losses within energy sectors.
Other provisions aim at improving business competitiveness by introducing reforms such as “deemed approved” permitting processes for certain environmental permits so applicants receive timely decisions or can appeal denials—addressing complaints about lengthy delays.
Spending controls were also implemented within human services programs by rebasing certain line items based on actual expenditures instead of projections.
The ongoing reduction in Corporate Net Income Tax rates continues under this budget alongside preservation of increased deductions for Net Operating Losses; these measures are expected to save businesses around $1.4 billion compared with previous rates.
Education funding sees increases across several programs: Ready to Learn Block Grant receives an additional $562 million; Basic Education gets another $105 million; Special Education rises by $40 million; Pre-K Counts grows by $9.5 million; while Educational Improvement Tax Credit expands by $50 million—aimed at providing greater school choice options particularly for families at disadvantaged schools.
A further $7.5 million goes toward Grow PA Scholarship Grants offering up to $5,000 per student pursuing degrees needed in high-demand fields if graduates stay employed within Pennsylvania after finishing their studies.
Additionally, there is now a Working Pennsylvanians Tax Credit—a state-level earned income tax credit equal to 10% of what eligible residents receive federally—which aims at giving lower-income families extra financial flexibility.
Workforce development funding saw restoration after an initial cut was proposed; programs training workers for stable jobs remain supported without interruption.
Support measures continue for older residents via transfers into lottery funds ($100 million) plus recurring i-gaming revenue ($90 million) along with additional aid directed towards Area Agencies on Aging ($10 million).
For agriculture stakeholders—including farmers—the Animal Diagnostic Laboratory System will be maintained against outbreaks while extra resources go toward food coupon initiatives ($7 million increase) as well as food purchase programs ($4 million increase).
A press conference video featuring Sen. Kim Ward, Sen. Joe Pittman, and House Republican Leader Jesse Topper discussing details about these changes is available online.
