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PRIOR PRINTER'S NO. 1808 PRINTER'S NO. 1879
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1534
Session of
2025
INTRODUCED BY HANBIDGE, CEPEDA-FREYTIZ, McNEILL, HADDOCK, HILL-
EVANS, SANCHEZ, CERRATO, RIVERA AND MALAGARI, JUNE 3, 2025
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, JUNE 10, 2025
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in tax credit and tax benefit administration,
further providing for definitions; and providing for
Pennsylvania Child and Dependent Care Enhancement Tax Credit
Program.; AND MAKING A REPEAL.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "tax credit" in section 1701-
A.1 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, is amended to read:
Section 1701-A.1. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
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"Tax credit." A tax credit authorized under any of the
following:
(1) Article XVII-B.
(2) Article XVII-D.
(3) Article XVII-E.
(4) Article XVII-G.
(5) Article XVII-H.
(6) Article XVII-I.
(7) Article XVII-J.
(8) Article XVII-K.
(8.1) Article XVII-L.
(9) Article XVIII.
(10) Article XVIII-B.
(11) Article XVIII-D.
(12) Article XVIII-E.
(13) Article XVIII-F.
(14) Article XVIII-G.
(14.1) Article XVIII-H.
(15) Article XIX-A.
(15.1) Article XIX-C.
(16) Article XIX-E.
(16.1) Article XIX-F.
(16.2) Article XIX-I.
(17) Section 2010.
(19) Article XX-B of the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
(20) The act of December 1, 2004 (P.L.1750, No.226),
known as the First Class Cities Economic Development District
Act.
(21) 12 Pa.C.S. Ch. 34 (relating to Infrastructure and
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Facilities Improvement Program).
(22) Any other program established by a law of this
Commonwealth in which a person applies for and receives a
credit against a tax. This paragraph shall not apply to a
credit against a tax liability as a result of an overpayment.
* * *
Section 2. The act is amended by adding an article to read:
ARTICLE XIX-I
PENNSYLVANIA CHILD AND DEPENDENT
CARE ENHANCEMENT TAX CREDIT PROGRAM
Section 1901-I. Scope of article.
This article relates to the Pennsylvania Child and Dependent
Care Enhancement Tax Credit Program.
Section 1902-I. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicable percent." As defined in section 21(a)(2) of the
Internal Revenue Code of 1986 in effect for the taxable year
beginning after December 31, 2021, and ending before January 1,
2023.
"Department." The Department of Revenue of the Commonwealth.
"Employment-related expenses." As defined in section 21(b)
(2) of the Internal Revenue Code of 1986.
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Qualifying individual." As defined in section 21(b)(1) of
the Internal Revenue Code of 1986.
"Resident individual." An individual who:
(1) is domiciled in this Commonwealth, unless the
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individual maintains no permanent place of abode in this
Commonwealth and maintains a permanent place of abode
elsewhere and spends in the aggregate no more than 30 days of
the taxable year in this Commonwealth; or
(2) is not domiciled in this Commonwealth, but maintains
a permanent place of abode in this Commonwealth and spends in
the aggregate more than 183 days of the taxable year in this
Commonwealth.
"Tax credit." A tax credit provided for under this article.
"Tax liability." The liability for taxes imposed under
Article III, excluding any tax withheld by an employer under
Article III.
"Taxable year." As defined in section 301.
"Taxpayer." A resident individual subject to the tax imposed
under Article III.
Section 1903-I. Credit for child and dependent care employment-
related expenses.
(a) Tax credit.--For taxable years beginning after December
31, 2021, a taxpayer who receives a credit under section 21 of
the Internal Revenue Code of 1986 may claim a tax credit against
the taxpayer's tax liability.
(b) Amount of tax credit.--The amount of the tax credit
under this section for the taxable year beginning after December
31, 2021, and ending before January 1, 2023, shall be equal to
30% of:
(1) the actual amount of employment-related expenses
incurred by the taxpayer and claimed for the Federal tax
credit under section 21 of the Internal Revenue Code of 1986
during the prior taxable year or the following, as
applicable, whichever is less:
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(i) $3,000 for one qualifying individual with
respect to the taxpayer; or
(ii) $6,000 for two or more qualifying individuals
with respect to the taxpayer; multiplied by
(2) the applicable percent, with respect to the
taxpayer, in effect for the taxable year beginning after
December 31, 2021, and ending before January 1, 2023.
(c) Amount of tax credit in subsequent taxable years.--The
amount of the tax credit under this section for taxable years
beginning after December 31, 2022, and for each taxable year
thereafter, shall be equal to 100% of:
(1) the actual amount of employment-related expenses
incurred by the taxpayer and claimed for the Federal tax
credit under section 21 of the Internal Revenue Code of 1986
during the prior taxable year or the following, as
applicable, whichever is less:
(i) $3,000 for one qualifying individual with
respect to the taxpayer; or
(ii) $6,000 for two or more qualifying individuals
with respect to the taxpayer; multiplied by
(2) the applicable percent, with respect to the
taxpayer, in effect for the taxable year beginning after
December 31, 2021, and ending before January 1, 2023.
(d) Claim of tax credit.--A taxpayer must claim the tax
credit under this section on a return filed under section 330.
(e) Applicability of tax credit.--The tax credit under this
section shall be applied against the taxpayer's tax liability.
If the tax credit exceeds the taxpayer's tax liability, the
department may issue a refund under the procedures specified in
section 346.
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Section 1904-I. Alternate credit for child and dependent care
employment-related expenses.
(a) Tax credit.--For taxable years beginning after December
31, 2024, a taxpayer who did not receive a credit under section
21 of the Internal Revenue Code of 1986 but participated in a
dependent care assistance program under section 129 of the
Internal Revenue Code of 1986 may claim a tax credit against the
taxpayer's tax liability.
(b) Amount of tax credit.--The amount of the tax credit
under this section shall be equal to 100% of:
(1) the actual amount of dependent care assistance
received by the taxpayer and claimed under section 129 of the
Internal Revenue Code of 1986 during the prior taxable year
or the following, as applicable, whichever is less:
(i) $3,000 for one dependent with respect to the
taxpayer; or
(ii) $6,000 for two or more dependents with respect
to the taxpayer; multiplied by
(2) the applicable percent that would have applied to
the taxpayer had they received a credit under section 21 of
the Internal Revenue Code of 1986 in effect for the taxable
year beginning after December 31, 2021, and ending before
January 1, 2023.
(c) Claim of tax credit.--A taxpayer must claim a tax credit
under this section on a return filed under section 330.
(d) Applicability of tax credit.--The tax credit under this
section shall be applied against the taxpayer's tax liability.
If the tax credit exceeds the taxpayer's tax liability, the
department may issue a refund under the procedures specified in
section 346.
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Section 1905-I Prohibitions.
A taxpayer may not:
(1) carry over, carry back or sell, assign or transfer
the tax credit; and
(2) claim the tax credit for the same employment-related
expenses used to claim the tax credit on a return filed by
another taxpayer.
Section 1906-I. Application of Internal Revenue Code of 1986.
The provisions of section 21 of the Internal Revenue Code of
1986 in effect as of July 8, 2022, and any Federal regulations
promulgated regarding those provisions, shall apply to the
department's interpretation and administration of the tax
credit.
Section 1907-I. Administration of article.
The department may jointly administer this article with other
provisions of this act, including joint reporting of
information, forms, returns, statements, documents or other
information submitted to the department.
Section 1908-I. Departmental duties.
The department shall publish guidelines and may promulgate
regulations as necessary for the implementation and
administration of this article.
Section 1909-I. Report to General Assembly.
(a) Annual report.--Each March 1, the department shall
submit a report to the General Assembly indicating the
effectiveness of the tax credit.
(b) Information required.--The report required under
subsection (a) shall include, but not be limited to, the
following information:
(1) The number of tax credits approved.
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(2) The amount of tax credits approved.
(3) The amount of tax credits claimed.
(4) The amount of tax credits refunded.
SECTION 3. REPEALS ARE AS FOLLOWS:
(1) THE GENERAL ASSEMBLY DECLARES THAT THE REPEAL UNDER
PARAGRAPH (2) IS NECESSARY TO EFFECTUATE THE AMENDMENT OF
SECTION 1701-A.1 AND THE ADDITION OF ARTICLE XIX-I OF THE ACT
OF MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE
OF 1971.
(2) ARTICLE XVI-W OF THE ACT OF APRIL 9, 1929 (P.L.343,
NO.176), KNOWN AS THE FISCAL CODE, IS REPEALED.
SECTION 4. THE ADDITION OF ARTICLE XIX-I OF THE ACT OF MARCH
4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS
A CONTINUATION OF ARTICLE XVI-W OF THE ACT OF APRIL 9, 1929
(P.L.343, NO.176), KNOWN AS THE FISCAL CODE. THE FOLLOWING
APPLY:
(1) EXCEPT AS OTHERWISE PROVIDED IN ARTICLE XIX-I OF THE
TAX REFORM CODE OF 1971, ALL ACTIVITIES INITIATED UNDER
ARTICLE XVI-W OF THE FISCAL CODE SHALL CONTINUE AND REMAIN IN
FULL FORCE AND EFFECT AND MAY BE COMPLETED UNDER ARTICLE XIX-
I OF THE TAX REFORM CODE OF 1971. ORDERS, REGULATIONS, RULES
AND DECISIONS WHICH WERE MADE UNDER ARTICLE XVI-W OF THE
FISCAL CODE AND WHICH ARE IN EFFECT ON THE EFFECTIVE DATE OF
THIS SECTION SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL
REVOKED, VACATED OR MODIFIED UNDER ARTICLE XIX-I OF THE TAX
REFORM CODE OF 1971. CONTRACTS AND OBLIGATIONS ENTERED INTO
UNDER ARTICLE XVI-W OF THE FISCAL CODE ARE NOT AFFECTED NOR
IMPAIRED BY THE REPEAL OF ARTICLE XVI-W OF THE FISCAL CODE.
(2) EXCEPT AS SET FORTH IN PARAGRAPH (3), ANY DIFFERENCE
IN LANGUAGE BETWEEN ARTICLE XIX-I OF THE TAX REFORM CODE OF
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1971 AND ARTICLE XVI-W OF THE FISCAL CODE IS INTENDED ONLY TO
CONFORM TO THE STYLE OF THE TAX REFORM CODE OF 1971 AND IS
NOT INTENDED TO CHANGE OR AFFECT THE LEGISLATIVE INTENT,
JUDICIAL CONSTRUCTION OR ADMINISTRATION AND IMPLEMENTATION OF
ARTICLE XVI-W OF THE FISCAL CODE.
(3) PARAGRAPH (2) DOES NOT APPLY TO THE ADDITION OF
SECTION 1904-I OF THE TAX REFORM CODE OF 1971.
Section 3 5. This act shall take effect immediately.
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