Formic acid has been known as one of key sources of hydrogen. Among various monometallic catalysts, hydrogen can be efficiently produced on Pd catalyst. However, the catalytic activity of Pd is gradually reduced by the blocking of active sites by CO, which is formed from the unwanted indirect oxidation of formic acid. One of promising solutions to overcome such issue is the design of alloy catalyst by adding other metal into Pd since alloying effect (such as ligand and strain effect) can increase the chance to mitigate CO poisoning issue. In this study, we have investigated formic acid deposition on the bimetallic Pd/Pd3Fe core-shell nanocatalyst using DFT (density functional theory) calculation. In comparison to Pd catalyst, the activation energy of formic acid dehydrogenation is greatly reduced on Pd/Pd3Fe catalyst. In order to understand the importance of alloying effects in catalysis, we decoupled the strain effect from ligand effect. We found that both strain effect and ligand effect reduced the binding energy of HCOO by 0.03 eV and 0.29 eV, respectively, compared to the pure Pd case. Our DFT analysis of electronic structure suggested that such decrease of HCOO binding energy is related to the dramatic reduction of density of state near the fermi level.