HB 1742 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, further providing for imposition of tax, for when withholding not required, for returns and liability and for return of Pennsylvania S corporation.

PRINTER'S NO.   2144

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1742
                                                  Session of
                                                    2025

     INTRODUCED BY BOROWICZ, HAMM, KUTZ, BERNSTINE, ZIMMERMAN, ROWE
        AND BANTA, JULY 15, 2025

     REFERRED TO COMMITTEE ON FINANCE, JULY 16, 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 personal income tax, further providing for
11      imposition of tax, for when withholding not required, for
12      returns and liability and for return of Pennsylvania S
13      corporation.
14      The General Assembly of the Commonwealth of Pennsylvania
15   hereby enacts as follows:
16      Section 1.    Sections 302(a), 323, 330(a) and 330.1(a) of the
17   act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
18   of 1971, are amended to read:
19      Section 302.    Imposition of Tax.--(a)     Except as provided in
20   subsection (c), every resident individual, estate or trust shall
21   be subject to, and shall pay for the privilege of receiving each
22   of the classes of income hereinafter enumerated in section 303,
23   a tax upon each dollar of income received by that resident
 1   during that resident's taxable year at the rate of three and
 2   seven hundredths per cent[.] until December 31, 2025. For
 3   taxable years beginning on or after January 1, 2026, no tax may
 4   be imposed under this article.
 5      * * *
 6      Section 323.    When Withholding Not Required.--Notwithstanding
 7   any provision of this code to the contrary, an employer on and
 8   after January 1, [1975] 2026, shall not be required to withhold
 9   any tax upon payment of wages to an employe. [if such employe
10   can certify:
11      (1)   that he incurred no personal income tax liability for
12   the preceding tax year; and
13      (2)   that he anticipates no liability for personal income tax
14   for the current taxable year.]
15      Section 330.    Returns and Liability.--(a)   [On] (1)    Subject
16   to clause (2), on or before the date when the taxpayer's Federal
17   income tax return is due or would be due if the taxpayer were
18   required to file a Federal income tax return, under the Internal
19   Revenue Code of 1954, a tax return under this article shall be
20   made and filed by or for every taxpayer having income for the
21   taxable year.
22      (2)   This section shall not apply to taxable years beginning
23   on or after December 31, 2025.
24      * * *
25      Section 330.1.    Return of Pennsylvania S Corporation.--(a)
26   [Every] (1)    Subject to clause (2), every Pennsylvania S
27   corporation shall make a return for each taxable year, stating
28   specifically all items of gross income and deductions, the names
29   and addresses of all persons owning stock in the corporation at
30   any time during the taxable year, the number of shares of stock

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 1   owned by each shareholder at all times during the taxable year,
 2   the amount of money and other property distributed by the
 3   corporation during the taxable year to each shareholder, the
 4   date of each distribution, each shareholder's pro rata share of
 5   each item of the corporation for the taxable year and such other
 6   information as the department may require.
 7      (2)   This section shall not apply to taxable years beginning
 8   on or after December 31, 2025.
 9      * * *
10      Section 2.   All acts and parts of acts are repealed insofar
11   as they are inconsistent with this act.
12      Section 3.   All regulations are abrogated to the extent of
13   any inconsistency with this act.
14      Section 4.   This act shall take effect immediately.




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