HB 1393 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in tax credit and tax benefit administration, further providing for definitions; providing for paid family and medical leave tax credit; and establishing the Family and Medical Leave Tax Credit Program.

PRINTER'S NO.   1588

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1393
                                               Session of
                                                 2025

     INTRODUCED BY MARCELL, M. MACKENZIE AND GAYDOS, MAY 5, 2025

     REFERRED TO COMMITTEE ON FINANCE, MAY 5, 2025


                                    AN ACT
 1   Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
 2      act relating to tax reform and State taxation by codifying
 3      and enumerating certain subjects of taxation and imposing
 4      taxes thereon; providing procedures for the payment,
 5      collection, administration and enforcement thereof; providing
 6      for tax credits in certain cases; conferring powers and
 7      imposing duties upon the Department of Revenue, certain
 8      employers, fiduciaries, individuals, persons, corporations
 9      and other entities; prescribing crimes, offenses and
10      penalties," in tax credit and tax benefit administration,
11      further providing for definitions; providing for paid family
12      and medical leave tax credit; and establishing the Family and
13      Medical Leave Tax Credit Program.
14      The General Assembly of the Commonwealth of Pennsylvania
15   hereby enacts as follows:
16      Section 1.    The definition of "tax credit" in section 1701-
17   A.1 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
18   Reform Code of 1971, is amended by adding a paragraph to read:
19   Section 1701-A.1.    Definitions.
20      The following words and phrases when used in this article
21   shall have the meanings given to them in this section unless the
22   context clearly indicates otherwise:
23      * * *
24      "Tax credit."    A tax credit authorized under any of the
 1   following:
 2            * * *
 3            (8.2)    Article XVII-M.
 4            * * *
 5      Section 2.      The act is amended by adding an article to read:
 6                                 ARTICLE XVII-M
 7                    PAID FAMILY AND MEDICAL LEAVE TAX CREDIT
 8   Section 1701-M.      Scope of article.
 9      This article relates to paid family and medical leave tax
10   credits.
11   Section 1702-M.      Definitions.
12      The following words and phrases when used in this article
13   shall have the meanings given to them in this section unless the
14   context clearly indicates otherwise:
15      "Business firm."      An entity authorized to do business in this
16   Commonwealth and subject to taxes imposed under Article III, IV,
17   VI, VII, VIII, IX or XV.
18      "Department."      The Department of Community and Economic
19   Development of the Commonwealth.
20      "Federal family and medical leave tax credit."      The tax
21   credit authorized under 26 U.S.C. § 45S (relating to employer
22   credit for paid family and medical leave).
23   Section 1703-M.      Family and Medical Leave Tax Credit Program.
24      (a)     Establishment.--The Family and Medical Leave Tax Credit
25   Program is established to supplement, not supplant, existing
26   Federal tax incentives for providing paid family and medical
27   leave to employees.
28      (b)     Information.--To qualify for a tax credit under this
29   article, a business firm must submit information to the
30   department that enables the department to confirm the amount of

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 1   the Federal family and medical leave tax credit that the
 2   business firm has received for providing paid family and medical
 3   leave to employees in this Commonwealth.
 4      (c)     Application.--The following apply to an application for
 5   a tax credit under this article that is submitted to the
 6   department by a business firm:
 7            (1)   The application must account for the wages paid to
 8      employees for which the business firm claimed the Federal
 9      family and medical leave tax credit.
10            (2)   The application must be on a form provided by the
11      department.
12            (3)   The department shall consult with the United States
13      Internal Revenue Service as necessary to determine that the
14      business firm provides paid family and medical leave for
15      employees.
16            (4)   The department shall review and approve or
17      disapprove the application.
18      (d)     Notification.--The department shall notify the business
19   firm that the business firm meets the requirements under this
20   article for that fiscal year no later than 60 days after the
21   business firm has submitted the application required under this
22   section.
23   Section 1704-M.    Availability of tax credits.
24      (a)     Application and receipt.--A business firm may:
25            (1)   Apply to the department for a tax credit in
26      accordance with section 1705-M.
27            (2)   Receive a tax credit under this article equal to the
28      amount of the Federal family and medical leave tax credit
29      received for the most recently completed tax year.
30      (b)     Limitations.--Tax credits under this section shall be

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 1   made available by the department on a first-come, first-served
 2   basis within the limitation established under section 1706-M(a).
 3   Section 1705-M.    Grant of tax credits.
 4      (a)   Tax credit certificate.--In accordance with section
 5   1706-M(a), the department shall grant a tax credit certificate
 6   to which the following apply:
 7            (1)   The certificate may be used against a tax liability
 8      owed to the Commonwealth by a business firm that provides
 9      proof of receipt of the Federal family and medical leave tax
10      credit in the taxable year in which the paid family and
11      medical leave was granted to an employee in this
12      Commonwealth.
13            (2)   The business firm may apply the credit against any
14      tax due under Article III, IV, VI, VII, VIII, IX or XV,
15      excluding any tax withheld by an employer under Article III.
16      (b)   Limitation.--The tax credit shall not exceed 100% of the
17   total amount of the Federal family and medical leave tax credit
18   received by a business firm for granting paid family and medical
19   leave to an employee in this Commonwealth for the taxable year
20   in which the paid family and medical leave was granted.
21   Section 1706-M.    Amount of tax credits.
22      (a)   Aggregate amount.--The total aggregate amount of all tax
23   credits approved under this article may not exceed $100,000,000
24   in a fiscal year.
25      (b)   Tax liability.--A tax credit granted for any one taxable
26   year may not exceed the tax liability of a business firm.
27      (c)   Use.--A tax credit not used in the taxable year the paid
28   family and medical leave was granted to an employee in this
29   Commonwealth may not be carried forward or carried back and is
30   not refundable or transferable.

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 1   Section 1707-M.    Guidelines.
 2      The department, in conjunction with the Department of
 3   Revenue, may establish guidelines as necessary to implement this
 4   article.
 5   Section 1708-M.    Reporting.
 6      In addition to the information required by section 1707-A.1,
 7   each report on the tax credit authorized under this article
 8   shall include:
 9          (1)   The number of tax credit applications denied solely
10      as the result of the limitation under section 1706-M(a).
11          (2)   The aggregate amount of tax credits not granted
12      solely as the result of the limitation in section 1706-M(a).
13          (3)   The average amount of each tax credit not granted
14      for the applications denied solely as the result of the
15      limitation in section 1706-M(a).
16      Section 3.     This act shall take effect in 60 days.




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