HB 1534 — 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 Pennsylvania Child and Dependent Care Enhancement Tax Credit Program; and making a repeal.

PRINTER'S NO.   1808

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1534
                                                Session of
                                                  2025

     INTRODUCED BY HANBIDGE, CEPEDA-FREYTIZ, McNEILL, HADDOCK, HILL-
        EVANS, SANCHEZ AND CERRATO, JUNE 3, 2025

     REFERRED TO COMMITTEE ON FINANCE, JUNE 3, 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; and providing for
12      Pennsylvania Child and Dependent Care Enhancement Tax Credit
13      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 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      * * *
 1      "Tax credit."      A tax credit authorized under any of the
 2   following:
 3             (1)    Article XVII-B.
 4             (2)    Article XVII-D.
 5             (3)    Article XVII-E.
 6             (4)    Article XVII-G.
 7             (5)    Article XVII-H.
 8             (6)    Article XVII-I.
 9             (7)    Article XVII-J.
10             (8)    Article XVII-K.
11             (8.1)    Article XVII-L.
12             (9)    Article XVIII.
13             (10)    Article XVIII-B.
14             (11)    Article XVIII-D.
15             (12)    Article XVIII-E.
16             (13)    Article XVIII-F.
17             (14)    Article XVIII-G.
18             (14.1)   Article XVIII-H.
19             (15)    Article XIX-A.
20             (15.1)   Article XIX-C.
21             (16)    Article XIX-E.
22             (16.1)   Article XIX-F.
23             (16.2)   Article XIX-I.
24             (17)    Section 2010.
25             (19)    Article XX-B of the act of March 10, 1949 (P.L.30,
26      No.14), known as the Public School Code of 1949.
27             (20)    The act of December 1, 2004 (P.L.1750, No.226),
28      known as the First Class Cities Economic Development District
29      Act.
30             (21)    12 Pa.C.S. Ch. 34 (relating to Infrastructure and

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 1      Facilities Improvement Program).
 2           (22)    Any other program established by a law of this
 3      Commonwealth in which a person applies for and receives a
 4      credit against a tax. This paragraph shall not apply to a
 5      credit against a tax liability as a result of an overpayment.
 6      * * *
 7      Section 2.     The act is amended by adding an article to read:
 8                               ARTICLE XIX-I
 9                      PENNSYLVANIA CHILD AND DEPENDENT
10                    CARE ENHANCEMENT TAX CREDIT PROGRAM
11   Section 1901-I.    Scope of article.
12      This article relates to the Pennsylvania Child and Dependent
13   Care Enhancement Tax Credit Program.
14   Section 1902-I.    Definitions.
15      The following words and phrases when used in this article
16   shall have the meanings given to them in this section unless the
17   context clearly indicates otherwise:
18      "Applicable percent."    As defined in section 21(a)(2) of the
19   Internal Revenue Code of 1986 in effect for the taxable year
20   beginning after December 31, 2021, and ending before January 1,
21   2023.
22      "Department."    The Department of Revenue of the Commonwealth.
23      "Employment-related expenses."         As defined in section 21(b)
24   (2) of the Internal Revenue Code of 1986.
25      "Internal Revenue Code of 1986."        The Internal Revenue Code
26   of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
27      "Qualifying individual."       As defined in section 21(b)(1) of
28   the Internal Revenue Code of 1986.
29      "Resident individual."    An individual who:
30           (1)    is domiciled in this Commonwealth, unless the

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 1      individual maintains no permanent place of abode in this
 2      Commonwealth and maintains a permanent place of abode
 3      elsewhere and spends in the aggregate no more than 30 days of
 4      the taxable year in this Commonwealth; or
 5             (2)   is not domiciled in this Commonwealth, but maintains
 6      a permanent place of abode in this Commonwealth and spends in
 7      the aggregate more than 183 days of the taxable year in this
 8      Commonwealth.
 9      "Tax credit."      A tax credit provided for under this article.
10      "Tax liability."      The liability for taxes imposed under
11   Article III, excluding any tax withheld by an employer under
12   Article III.
13      "Taxable year."      As defined in section 301.
14      "Taxpayer."      A resident individual subject to the tax imposed
15   under Article III.
16   Section 1903-I.      Credit for child and dependent care employment-
17                   related expenses.
18      (a)    Tax credit.--For taxable years beginning after December
19   31, 2021, a taxpayer who receives a credit under section 21 of
20   the Internal Revenue Code of 1986 may claim a tax credit against
21   the taxpayer's tax liability.
22      (b)    Amount of tax credit.--The amount of the tax credit
23   under this section for the taxable year beginning after December
24   31, 2021, and ending before January 1, 2023, shall be equal to
25   30% of:
26             (1)   the actual amount of employment-related expenses
27      incurred by the taxpayer and claimed for the Federal tax
28      credit under section 21 of the Internal Revenue Code of 1986
29      during the prior taxable year or the following, as
30      applicable, whichever is less:

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 1                  (i)    $3,000 for one qualifying individual with
 2            respect to the taxpayer; or
 3                  (ii)    $6,000 for two or more qualifying individuals
 4            with respect to the taxpayer; multiplied by
 5            (2)   the applicable percent, with respect to the
 6      taxpayer, in effect for the taxable year beginning after
 7      December 31, 2021, and ending before January 1, 2023.
 8      (c)   Amount of tax credit in subsequent taxable years.--The
 9   amount of the tax credit under this section for taxable years
10   beginning after December 31, 2022, and for each taxable year
11   thereafter, shall be equal to 100% of:
12            (1)   the actual amount of employment-related expenses
13      incurred by the taxpayer and claimed for the Federal tax
14      credit under section 21 of the Internal Revenue Code of 1986
15      during the prior taxable year or the following, as
16      applicable, whichever is less:
17                  (i)    $3,000 for one qualifying individual with
18            respect to the taxpayer; or
19                  (ii)    $6,000 for two or more qualifying individuals
20            with respect to the taxpayer; multiplied by
21            (2)   the applicable percent, with respect to the
22      taxpayer, in effect for the taxable year beginning after
23      December 31, 2021, and ending before January 1, 2023.
24      (d)   Claim of tax credit.--A taxpayer must claim the tax
25   credit under this section on a return filed under section 330.
26      (e)   Applicability of tax credit.--The tax credit under this
27   section shall be applied against the taxpayer's tax liability.
28   If the tax credit exceeds the taxpayer's tax liability, the
29   department may issue a refund under the procedures specified in
30   section 346.

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 1   Section 1904-I.       Alternate credit for child and dependent care
 2                  employment-related expenses.
 3      (a)   Tax credit.--For taxable years beginning after December
 4   31, 2024, a taxpayer who did not receive a credit under section
 5   21 of the Internal Revenue Code of 1986 but participated in a
 6   dependent care assistance program under section 129 of the
 7   Internal Revenue Code of 1986 may claim a tax credit against the
 8   taxpayer's tax liability.
 9      (b)   Amount of tax credit.--The amount of the tax credit
10   under this section shall be equal to 100% of:
11            (1)   the actual amount of dependent care assistance
12      received by the taxpayer and claimed under section 129 of the
13      Internal Revenue Code of 1986 during the prior taxable year
14      or the following, as applicable, whichever is less:
15                  (i)    $3,000 for one dependent with respect to the
16            taxpayer; or
17                  (ii)    $6,000 for two or more dependents with respect
18            to the taxpayer; multiplied by
19            (2)   the applicable percent that would have applied to
20      the taxpayer had they received a credit under section 21 of
21      the Internal Revenue Code of 1986 in effect for the taxable
22      year beginning after December 31, 2021, and ending before
23      January 1, 2023.
24      (c)   Claim of tax credit.--A taxpayer must claim a tax credit
25   under this section on a return filed under section 330.
26      (d)   Applicability of tax credit.--The tax credit under this
27   section shall be applied against the taxpayer's tax liability.
28   If the tax credit exceeds the taxpayer's tax liability, the
29   department may issue a refund under the procedures specified in
30   section 346.

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 1   Section 1905-I     Prohibitions.
 2      A taxpayer may not:
 3             (1)   carry over, carry back or sell, assign or transfer
 4      the tax credit; and
 5             (2)   claim the tax credit for the same employment-related
 6      expenses used to claim the tax credit on a return filed by
 7      another taxpayer.
 8   Section 1906-I.     Application of Internal Revenue Code of 1986.
 9      The provisions of section 21 of the Internal Revenue Code of
10   1986 in effect as of July 8, 2022, and any Federal regulations
11   promulgated regarding those provisions, shall apply to the
12   department's interpretation and administration of the tax
13   credit.
14   Section 1907-I.     Administration of article.
15      The department may jointly administer this article with other
16   provisions of this act, including joint reporting of
17   information, forms, returns, statements, documents or other
18   information submitted to the department.
19   Section 1908-I.     Departmental duties.
20      The department shall publish guidelines and may promulgate
21   regulations as necessary for the implementation and
22   administration of this article.
23   Section 1909-I.     Report to General Assembly.
24      (a)    Annual report.--Each March 1, the department shall
25   submit a report to the General Assembly indicating the
26   effectiveness of the tax credit.
27      (b)    Information required.--The report required under
28   subsection (a) shall include, but not be limited to, the
29   following information:
30             (1)   The number of tax credits approved.

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1         (2)   The amount of tax credits approved.
2         (3)   The amount of tax credits claimed.
3         (4)   The amount of tax credits refunded.
4     Section 3.    This act shall take effect immediately.




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