SB 401 — 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 providing for the Pennsylvania National Guard employer tax credit.

PRINTER'S NO.    347

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         SENATE BILL
                         No. 401
                                               Session of
                                                 2025

     INTRODUCED BY PENNYCUICK, BARTOLOTTA, FONTANA, COLLETT,
        HUTCHINSON, COSTA, HUGHES, BROWN, DUSH AND FARRY,
        MARCH 6, 2025

     REFERRED TO FINANCE, MARCH 6, 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 the
12      Pennsylvania National Guard employer 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 by adding a paragraph 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:
22      * * *
 1         "Tax credit."    A tax credit authorized under any of the
 2   following:
 3               * * *
 4               (16.2)   Article XIX-L.
 5               * * *
 6         Section 2.     The act is amended by adding an article to read:
 7                                  ARTICLE XIX-L
 8                           PENNSYLVANIA NATIONAL GUARD
 9                               EMPLOYER TAX CREDIT
10   Section 1901-L.       Definitions.
11         The following words and phrases when used in this article
12   shall have the meanings given to them in this section unless the
13   context clearly indicates otherwise:
14         "Department."    The Department of Revenue of the Commonwealth.
15         "Pennsylvania National Guard."          The Pennsylvania Army
16   National Guard and the Pennsylvania Air National Guard.
17         "Tax credit."    The tax credit available to employers of
18   members of any reserve component of the armed forces under this
19   article.
20         "Taxpayer."    An entity subject to tax under Article III or
21   IV.
22   Section 1902-L.       Tax credit for employment.
23         (a)   Tax credit available.--A taxpayer is eligible for a tax
24   credit as provided in subsection (b) against the tax imposed
25   under Article III or IV, but shall not include any tax withheld
26   by an employer from an employee under Article III, if:
27               (1)   the taxpayer hires an active member of the
28         Pennsylvania National Guard;
29               (2)   an employee of the taxpayer enlists in the
30         Pennsylvania National Guard; or

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 1            (3)   an employee of the taxpayer reenlists in the
 2      Pennsylvania National Guard.
 3      (b)   Maximum tax credit.--A taxpayer may claim a tax credit
 4   in the amount of $1,000 for each full-time employee who
 5   qualifies under subsection (a)(1), (2) or (3). A taxpayer may
 6   claim a tax credit under this section only once with respect to
 7   each qualified employee and may not claim a tax credit if a
 8   previous employer of the employee claimed a tax credit.
 9      (c)   Claim period.--Claims for a tax credit shall be filed
10   for the first taxable year for which the taxpayer was entitled
11   to claim the tax credit. Failure to comply with this subsection
12   shall constitute a waiver of the tax credit.
13   Section 1903-L.    Carryover and carryback of tax credit.
14      (a)   Excess tax credit.--If a taxpayer cannot use the entire
15   amount of the tax credit for the first taxable year in which the
16   employer is eligible for the tax credit, the excess may be
17   carried over to succeeding taxable years and used as a tax
18   credit against the qualified tax liability of the taxpayer for
19   those taxable years.
20            (1)   Each time the tax credit is carried over to a
21      succeeding taxable year, it shall be reduced by the amount
22      that was used as a credit during the immediately preceding
23      taxable year.
24            (2)   The tax credit provided by this article may be
25      carried over and applied to succeeding taxable years for no
26      more than three taxable years following the first taxable
27      year for which the taxpayer was entitled to claim the tax
28      credit.
29      (b)   No carryback.--A taxpayer is not entitled to carry back
30   or obtain a refund of an unused tax credit.

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 1   Section 1904-L.    Total amount of tax credits.
 2      The total amount of tax credits authorized by this article
 3   shall not exceed $5,000,000 in each fiscal year. If the tax
 4   credits exceed the $5,000,000 cap in a given year, the tax
 5   credits shall be allocated on a pro rata basis.
 6   Section 1905-L.    Regulations.
 7      The department shall prepare any forms that may be necessary
 8   to claim a tax credit, may require proof of the claim for the
 9   tax credit and may adopt rules and promulgate regulations to
10   administer the tax credit.
11      Section 3.     This act shall apply to tax years beginning after
12   December 31, 2025.
13      Section 4.     This act shall take effect in 30 days.




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