HB 2195 — 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; and establishing the child adoption tax credit.

PRINTER'S NO.   2864

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 2195
                                                Session of
                                                  2026

     INTRODUCED BY FLEMING, ROWE, HARKINS, GUZMAN, FREEMAN, HANBIDGE,
        NEILSON, RABB, MERSKI, KAZEEM, SANCHEZ, BURGOS, MAYES,
        MADDEN, PASHINSKI, OTTEN, RIVERA, HADDOCK, ANDERSON, COOPER,
        CEPEDA-FREYTIZ, SHUSTERMAN, D. WILLIAMS AND INGLIS,
        FEBRUARY 4, 2026

     REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 4, 2026


                                    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 establishing the child
12      adoption tax credit.
13      The General Assembly of the Commonwealth of Pennsylvania
14   hereby enacts as follows:
15      Section 1.    The definition of "tax credit" in section 1701-
16   A.1 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
17   Reform Code of 1971, is amended to read:
18   Section 1701-A.1.    Definitions.
19      The following words and phrases when used in this article
20   shall have the meanings given to them in this section unless the
21   context clearly indicates otherwise:
 1      * * *
 2      "Tax credit."      A tax credit authorized under any of the
 3   following:
 4             (1)    Article XVII-B.
 5             (2)    Article XVII-D.
 6             (3)    Article XVII-E.
 7             (4)    Article XVII-G.
 8             (5)    Article XVII-H.
 9             (6)    Article XVII-I.
10             (7)    Article XVII-J.
11             (8)    Article XVII-K.
12             (8.1)    Article XVII-L.
13             (9)    Article XVIII.
14             (10)    Article XVIII-B.
15             (11)    Article XVIII-D.
16             (12)    Article XVIII-E.
17             (13)    Article XVIII-F.
18             (14)    Article XVIII-G.
19             (14.1)   Article XVIII-H.
20             (15)    Article XIX-A.
21             (15.1)   Article XIX-C.
22             (16)    Article XIX-E.
23             (16.1)   Article XIX-F.
24             (16.2)   Article XIX-L.
25             (17)    Section 2010.
26             (19)    Article XX-B of the act of March 10, 1949 (P.L.30,
27      No.14), known as the Public School Code of 1949.
28             (20)    The act of December 1, 2004 (P.L.1750, No.226),
29      known as the First Class Cities Economic Development District
30      Act.

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 1            (21)    12 Pa.C.S. Ch. 34 (relating to Infrastructure and
 2      Facilities Improvement Program).
 3            (22)    Any other program established by a law of this
 4      Commonwealth in which a person applies for and receives a
 5      credit against a tax. This paragraph shall not apply to a
 6      credit against a tax liability as a result of an overpayment.
 7      * * *
 8      Section 2.     The act is amended by adding an article to read:
 9                                ARTICLE XIX-L
10                          CHILD ADOPTION TAX CREDIT
11   Section 1901-L.     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      "Adopted child."     A child who:
16            (1)    is adopted by a taxpayer;
17            (2)    at the time of adoption is under 18 years of age;
18      and
19            (3)    is not the child of the taxpayer's spouse.
20      "Department."     The Department of Revenue of the Commonwealth.
21      "Resident individual."     As defined in section 301(p).
22      "Tax credit."     The child adoption tax credit authorized by
23   this article.
24      "Taxable year."     As defined in section 301(v).
25      "Taxpayer."     A resident individual subject to tax under
26   Article III.
27   Section 1902-L.     Child adoption tax credit.
28      (a)   Tax credit available.--A taxpayer is eligible for a tax
29   credit as provided in subsection (b) against the tax imposed
30   under Article III if:

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 1             (1)   The taxpayer adopts a child who at the time of
 2      adoption is under 18 years of age in the taxable year the
 3      adoption was finalized.
 4             (2)   The tax credit is only claimed once per adopted
 5      child by the taxpayer or the taxpayer's spouse in the year
 6      the adoption was finalized. The tax credit may be claimed by
 7      individuals filing jointly.
 8      (b)    Maximum tax credit.--A taxpayer may claim a tax credit
 9   in the amount of $1,000 for each adopted child.
10      (c)    Claim of tax credit.--A taxpayer must claim a tax credit
11   under this article on a return filed under section 330.
12   Section 1903-L.     Forms and regulations.
13      The department shall establish a form necessary to claim a
14   tax credit, may require proof of the claim for the tax credit
15   and may adopt rules and promulgate regulations to administer the
16   tax credit.
17   Section 1904-L.     Report to General Assembly.
18      (a)    Annual report.--No later than October 15, 2027, and each
19   October 15 thereafter, the department shall submit a report to
20   the General Assembly indicating the effectiveness of the tax
21   credit.
22      (b)    Information required.--The report required under
23   subsection (a) shall include, but not be limited to, the
24   following information:
25             (1)   The number of tax credits approved.
26             (2)   The amount of tax credits approved.
27             (3)   The amount of tax credits claimed.
28      Section 3.     This act shall apply to tax years beginning after
29   December 31, 2025.
30      Section 4.     This act shall take effect immediately.

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