HB 1775 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in entertainment production tax credit, further providing for definitions and for limitations, providing for audits, further providing for limitations and providing for formal review by department, for creative professionals tax credit and for miscellaneous provisions.

PRINTER'S NO.   2183

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1775
                                                Session of
                                                  2025

     INTRODUCED BY CARROLL, RIVERA, HOHENSTEIN, HILL-EVANS, SANCHEZ,
        MERSKI, CEPEDA-FREYTIZ, D. WILLIAMS AND FIEDLER,
        JULY 30, 2025

     REFERRED TO COMMITTEE ON FINANCE, AUGUST 4, 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 entertainment production tax credit, further
11      providing for definitions and for limitations, providing for
12      audits, further providing for limitations and providing for
13      formal review by department, for creative professionals tax
14      credit and for miscellaneous provisions.
15      The General Assembly of the Commonwealth of Pennsylvania
16   hereby enacts as follows:
17      Section 1.     Section 1711-D of the act of March 4, 1971
18   (P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
19   by adding a definition to read:
20   Section 1711-D.    Definitions.
21      The following words and phrases when used in this subarticle
22   shall have the meanings given to them in this section unless the
23   context clearly indicates otherwise:
 1      * * *
 2      "Digital media company."          A business that primarily creates,
 3   produces and distributes content in digital formats, consumed
 4   and accessed online or through digital devices.
 5      * * *
 6      Section 2.        Section 1716-D(a) introductory paragraph, (b) and
 7   (f) of the act are amended and the section is amended by adding
 8   subsections to read:
 9   Section 1716-D.       Limitations.
10      (a)   Cap.--Except for tax credits reissued under section
11   1716.1-D, in no case shall the aggregate amount of tax credits
12   awarded in any fiscal year under this subarticle exceed
13   [$100,000,000] $400,000,000. The department may, in its
14   discretion, award in one fiscal year up to:
15            * * *
16      (b)   Individual limitations.--The following shall apply:
17            (1)     Except as set forth in paragraph (1.1) [or], (1.2)
18      or (1.3), the aggregate amount of film production tax credits
19      awarded by the department under section 1712-D(d) to a
20      taxpayer for a film may not exceed [25%]:
21                  (i)    30% of the qualified film production expenses to
22            be incurred[.], if the qualified production expenses are
23            less than $50,000,000; or
24                  (ii)    35% of the qualified film production expenses
25            to be incurred, if the qualified production expenses
26            equal or exceed $50,000,000.
27            (1.1)    In addition to the tax credit under paragraph (1),
28      a taxpayer is eligible for a credit in the amount of 5% of
29      the qualified film production expenses incurred by the
30      taxpayer if the taxpayer:

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 1             (i)    films a feature film, television film or
 2        television series, which is intended as programming for a
 3        national audience; and
 4             (ii)    films in a qualified production facility which
 5        meets the minimum stage filming requirements.
 6        (1.2)     A qualified postproduction expense shall qualify
 7    for a 30% credit.
 8        (1.3)     In addition to the tax credit under paragraph (1),
 9    a taxpayer is eligible for the following stackable credits,
10    which may be combined:
11             (i)    In the amount of 5% of the qualified film
12        production expenses incurred by the taxpayer if the
13        taxpayer produces the film with employees, at least 60%
14        of whom are residents of this Commonwealth.
15             (ii)    In the amount of 5% of the qualified film
16        production expenses incurred by the taxpayer if the
17        taxpayer displays the official Pennsylvania tourism logo
18        in the end credits of, or the promotional materials for,
19        the film.
20             (iii)    In the amount of 5% of the qualified film
21        production expenses incurred by the taxpayer if the film
22        is shot on location in any of the following counties:
23        Armstrong County; Beaver County; Bedford County; Blair
24        County; Butler County; Cambria County; Centre County;
25        Clarion County; Clearfield County; Columbia County;
26        Crawford County; Erie County; Fayette County; Fulton
27        County; Greene County; Huntingdon County; Indiana County;
28        Jefferson County; Juniata County; Lawrence County; Mercer
29        County; Mifflin County; Montour County; Northumberland
30        County; Schuylkill County; Snyder County; Somerset

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 1             County; Union County; Venango County; Washington County;
 2             or Westmoreland County.
 3             (2)   A taxpayer that has received a grant under 12
 4      Pa.C.S. § 4106 (relating to approval) shall not be eligible
 5      for a film production tax credit under this act for the same
 6      film.
 7      (b.1)    Base credit increase.--
 8             (1)   Projects with budgets under $50,000,000 shall
 9      receive a 30% tax credit on qualified expenditures.
10             (2)   Projects with budgets of at least $50,000,000 shall
11      receive a 35% tax credit on qualified expenditures.
12      (b.2)    Program cap.--The aggregate amount of tax credits
13   awarded in a fiscal year under this subarticle shall not exceed
14   $400,000,000, with allocations managed by the Pennsylvania Film
15   Office.
16      * * *
17      (e.1)    Small production reserve.--Fifteen percent of the
18   annual allocation under this subarticle, with a minimum of
19   $60,000,000, shall be reserved for Pennsylvania-based production
20   and digital media companies for projects with budgets of
21   $5,000,000 or less. Individual projects under this subsection
22   shall be eligible for tax credits starting at $150,000 in
23   qualified expenditures.
24      (f)     If the total amount of tax credits reserved and
25   allocated under subsection (e) is not awarded in a fiscal year,
26   the amount not awarded shall be made available for use by
27   taxpayers who are not Pennsylvania film producers or digital
28   media companies.
29      (g)     Retention credit pilot expansion.--Effective January 1,
30   2026, a $10,000,000 pilot program is established to provide tax

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 1   credits to creative professionals, including directors,
 2   animators, editors, post-supervisors and showrunners who commit
 3   to Pennsylvania-based film, television, digital media or
 4   streaming media projects for at least three years. Credits under
 5   this subsection shall be capped at $150,000 per individual
 6   annually. Eligible professionals must demonstrate multiyear
 7   engagement with Pennsylvania productions or postproduction
 8   residencies.
 9      Section 3.     The act is amended by adding a section to read:
10   Section 1722-D.      Audits.
11      The Auditor General shall conduct an annual audit to verify
12   that taxpayers that received tax credits under section 1716-D(b)
13   (1), (1.2) and (1.3) complied with those provisions, as
14   applicable.
15      Section 4.     Section 1757-D of the act is amended to read:
16   Section 1757-D.      Limitations.
17      (a)   Cap.--In no case shall the aggregate amount of tax
18   credits awarded in a fiscal year under this subarticle exceed
19   $1,000,000.
20      (b)   Individual limitations.--
21            [The] (1)    Except as set forth in paragraph (2), the
22      aggregate amount of video game production tax credits awarded
23      by the department under section 1753-D(d) to a taxpayer for a
24      video game may not exceed 25% of the qualified video game
25      production expenses to be incurred during each of the first
26      four years that the video game production expenses are
27      incurred and 10% for each year thereafter that the video game
28      production expenses are incurred.
29            (2)   In addition to the tax credit under paragraph (1), a
30      taxpayer is eligible for a credit in the amount of 5% of the

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 1      qualified video game production expenses incurred by the
 2      taxpayer if the taxpayer develops a video game project
 3      involving coding, art, sound design or narrative development,
 4      in this Commonwealth.
 5      Section 5.     The act is amended by adding a section to read:
 6   Section 1762-D.    Formal review by department.
 7      The department shall, in consultation with a Statewide
 8   organization that represents interactive entertainment, conduct
 9   a formal review to assess the additional needs and scalability
10   of tax credits similar to the tax credit under section 1757-D(b)
11   (2) for gaming and immersive media.
12      Section 6.     Article XVII-D of the act is amended by adding
13   subarticles to read:
14                                SUBARTICLE F
15                     CREATIVE PROFESSIONALS TAX CREDIT
16   Section 1791-D.    Scope of subarticle.
17      This subarticle relates to creative professionals tax
18   credits.
19   Section 1792-D.    Definitions.
20      The following words and phrases when used in this subarticle
21   shall have the meanings given to them in this section unless the
22   context clearly indicates otherwise:
23      "Creative professional."       An individual who is employed as a
24   director, animator, editor, post-supervisor, showrunner or any
25   other creative role in film, television, digital media or
26   streaming media productions in this Commonwealth.
27      "Multiyear production."    A series of separate and distinct
28   films that are produced by the same taxpayer in this
29   Commonwealth over a period of no more than three years from the
30   time of application.

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 1      "Qualified tax liability."     The liability for taxes imposed
 2   under Article III.
 3      "Start date."     The first day of principal production of a
 4   film in this Commonwealth.
 5      "Tax credit."     The creative professional tax credit provided
 6   under this subarticle.
 7      "Taxpayer."    A creative professional subject to tax under
 8   Article III.
 9   Section 1793-D.    Credit.
10      (a)   Application.--A taxpayer may apply to the department for
11   a tax credit under this section. The application shall be on the
12   form required by the department.
13      (b)   Review and approval.--The department shall review and
14   approve or disapprove applications submitted under this
15   subarticle in the order in which they are received. Upon
16   determining that the taxpayer has incurred or will incur
17   qualified tax liability, the department may approve the taxpayer
18   for a tax credit.
19      (c)   Contract.--If the department approves the taxpayer's
20   application under subsection (b), the department and the
21   taxpayer shall enter into a contract containing the following:
22            (1)   An itemized list of multiyear productions.
23            (2)   With respect to a contract entered into prior to
24      completion of production, a commitment by the taxpayer to
25      engage in the multiyear productions as itemized.
26            (3)   The principal production start date.
27            (4)   Any other information the department deems
28      appropriate.
29      (c.1)   Prohibition.--A tax credit may not be awarded for
30   fiscal years prior to fiscal year 2025-2026.

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 1      (d)   Certificate.--Upon execution of the contract required by
 2   subsection (c), the department shall award the taxpayer a
 3   creative professional tax credit and issue the taxpayer a
 4   creative professional tax credit certificate.
 5   Section 1794-D.   Creative professionals tax credits.
 6      Beginning July 1, 2026, a taxpayer may claim a tax credit
 7   against the qualified tax liability of the taxpayer.
 8   Section 1795-D.   Carryover, carryback and assignment of credit.
 9      (a)   General rule.--If the taxpayer cannot use the entire
10   amount of the tax credit for the taxable year in which the tax
11   credit is first approved, the excess may be carried over to
12   succeeding taxable years and used as a credit against the
13   qualified tax liability of the taxpayer for those taxable years.
14   Each time the tax credit is carried over to a succeeding taxable
15   year, it shall be reduced by the amount that was used as a
16   credit during the immediately preceding taxable year. The tax
17   credit may be carried over and applied to succeeding taxable
18   years for no more than three taxable years following the first
19   taxable year for which the taxpayer was entitled to claim the
20   tax credit.
21      (b)   Application.--A tax credit approved by the department in
22   a taxable year first shall be applied against the taxpayer's
23   qualified tax liability for the current taxable year as of the
24   date on which the tax credit was approved before the tax credit
25   can be applied against any tax liability under subsection (a).
26      (c)   No carryback or refund.--A taxpayer is not entitled to
27   carry back or obtain a refund of all or any portion of an unused
28   tax credit granted to the taxpayer under this subarticle.
29      (d)   (Reserved).
30      (e)   Sale or assignment prohibited.--A taxpayer may not sell

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 1   or assign, in whole or in part, a tax credit granted to the
 2   taxpayer under this subarticle.
 3   Section 1796-D.    Limitations.
 4      (a)   Cap.--In no case shall the aggregate amount of tax
 5   credits awarded in a fiscal year under this subarticle exceed
 6   $20,000,000.
 7      (b)   Individual limitations.--The aggregate amount of
 8   creative professional tax credits awarded by the department to a
 9   taxpayer may not exceed $150,000 in any taxable year.
10   Section 1797-D.    Penalty.
11      A taxpayer that claims a tax credit and breaches the contract
12   entered into in section 1793-D(c) shall repay to the
13   Commonwealth the amount of the creative professional tax credit
14   claimed under this subarticle.
15                                 SUBARTICLE G
16                          MISCELLANEOUS PROVISIONS
17   Section 1799.1-D.    Duties of department.
18      The department shall:
19            (1)   In consultation with a film or gaming production
20      company based in this Commonwealth and not later than April
21      1, 2026, develop and implement a dashboard on a publicly
22      accessible Internet website. The dashboard shall track tax
23      credits issued under this article, jobs created and economic
24      benefits to this Commonwealth as a result of the tax credits
25      issued under this article and usage of tax credits reserved
26      under section 1716-D(e).
27            (2)   Not later than December 31, 2033, prepare and submit
28      a report to the General Assembly. The report shall consist of
29      an analysis of the economic impact of the tax credits awarded
30      under this article.

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1          (3)   Ensure that all approved tax credits under this
2      article are disbursed or returned within a single calendar
3      year of eligibility certification.
4      Section 7.   This act shall apply to taxable years commencing
5   on or after December 31, 2025.
6      Section 8.   This act shall take effect immediately.




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