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 factory or mill building economic revitalization.

PRINTER'S NO. 1873
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1575
Session of
2025
INTRODUCED BY FREEMAN, SAMUELSON, SCHLOSSBERG, NEILSON, PIELLI,
KHAN, GALLAGHER, CEPEDA-FREYTIZ, PROBST, SHUSTERMAN, OTTEN,
INGLIS, PASHINSKI AND MERSKI, JUNE 9, 2025
REFERRED TO COMMITTEE ON FINANCE, JUNE 9, 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 factory
or mill building economic revitalization.
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:
* * *
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
"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.
(8.2) Article XVII-M.
(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.
(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
20250HB1575PN1873 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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 XVII-M
FACTORY OR MILL BUILDING
ECONOMIC REVITALIZATION
Section 1701-M. 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:
"Building." A factory or mill complex that:
(1) was constructed prior to January 1, 1973;
(2) has at least one floor, excluding a basement;
(3) has been, is or will be used primarily for
manufacturing, processing, wholesale trade and other
commercial purposes and may be adaptively reused for
residential, commercial, cultural, institutional or
industrial uses or any combination thereof;
(4) is proposed for substantial rehabilitation;
(5) has been at a minimum 75% vacant for a minimum of 24
months at the time of submission of a request under section
1702-M by the municipality in which the factory or mill
complex is located;
(6) is designated by the municipality for consideration
as a program-eligible building as provided in this article;
and
20250HB1575PN1873 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(7) meets any other requirement established by the
department.
"Building owner." An individual, partnership, corporation,
limited liability company or other entity which is the owner of
record of a program-eligible building and may include one or
more successors in title to the owner of the building at the
time the building received written notice of final designation
as a program-eligible building in accordance with section 1703-
M. The term includes the owner of a leasehold interest with a
minimum term of 30 years, with respect to which a memorandum of
lease has been recorded in the office of the recorder of deeds
of the county.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Factory or mill complex." One or more factory or mill
buildings, located on the same or contiguous parcels of land,
each of which, at one time, had the same owner or owners.
"Program-eligible building." A building with respect to
which the department has issued a written notice of final
designation as a program-eligible building in accordance with
section 1703-M.
"Qualified tax liability." Tax liability imposed on a
taxpayer under Article III, IV, VII, VIII, IX, XI or XV,
excluding any tax withheld by an employer under Article III.
"Rehabilitation and reconstruction costs." As follows:
(1) Amounts incurred and paid by a building owner, after
issuance of the notice of final designation of the building
as a program-eligible building, which are solely and
exclusively for the rehabilitation of the program-eligible
building. The term includes amounts incurred and paid to
20250HB1575PN1873 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
acquire tangible personal property and structural components
of the program-eligible building which:
(i) are depreciated under 26 U.S.C. § 167 (relating
to depreciation);
(ii) have a useful life of at least three years as
evidenced by the tax depreciation method taken and shown
on the Federal tax return of the building owner; and
(iii) are acquired by purchase as defined in 26
U.S.C. § 179(d) (relating to election to expense certain
depreciable business assets).
(2) The term does not include amounts incurred or paid
with respect to tangible personal property and structural
components of a program-eligible building which the building
owner leases from any other person or corporation. For
purposes of this paragraph, a contract or agreement to lease
or rent or for a license to use property shall be considered
a lease unless the contract or agreement is treated for
Federal income tax purposes of the building owner as an
installment purchase rather than a lease.
"Secretary." The Secretary of Community and Economic
Development of the Commonwealth.
"Substantial rehabilitation." Rehabilitation and
reconstruction costs of a program-eligible building that are:
(1) incurred during the time period for project
completion specified by the building owner on the building
owner's application for a tax credit certificate and approved
by the department under section 1704-M; and
(2) in a dollar amount that equals or exceeds 20% of the
appraised market value of the program-eligible building prior
to reconstruction or rehabilitation, which are determined by
20250HB1575PN1873 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
a Commonwealth licensed and certified appraiser who is
independent of the building owner or owners and their
affiliated corporations and any tenants of the program-
eligible building and their affiliated corporations. For
purposes of determining whether a program-eligible building
has been substantially rehabilitated, the market value of the
program-eligible building shall be determined at the
beginning of the day on which the department issued notice of
final designation of the program-eligible building.
"Tax credit." A tax credit issued under this article.
"Taxpayer." A person subject to tax under Article III, IV,
VII, VIII, IX, XI or XV. The term includes a pass-through
entity.
Section 1702-M. Building designation process.
(a) Request by municipality.--Beginning 18 months after the
effective date of this section, a municipality may submit to the
department a list of buildings located within the municipality
that the municipality requests the department to consider for
designation as program-eligible buildings. The request must
include a statement by the municipality attesting that, within
six months of preliminary designation of one or more of the
listed buildings as program-eligible buildings, the municipality
agrees to:
(1) expedite the building permit review process required
in the municipality for the rehabilitation of the program-
eligible buildings;
(2) provide design standards in the municipality which
encourage historic preservation of the program-eligible
buildings and that conform to rehabilitation design standards
developed and recommended by the Pennsylvania Historical and
20250HB1575PN1873 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Museum Commission and the United States Secretary of the
Interior's Standards for the Treatment of Historic
Properties; and
(3) require the review and approval by the Pennsylvania
Historical and Museum Commission be obtained for the
rehabilitation of any program-eligible building in the
municipality.
(b) Preliminary designation.--Within 60 days of receipt of a
request from a municipality under subsection (a), the department
shall notify the municipality in writing as to which buildings
have been approved for preliminary designation as program-
eligible buildings.
(c) Treatment as separate building.--A portion of a building
may be treated as a separate building for purposes of this
article if:
(1) it consists of a clearly identifiable part of a
building, including, without limitation, one or more wings,
stories or other separable portions of the building;
(2) it is held by a single owner in fee or as a
condominium, cooperative or leasehold interest; and
(3) at least one business reasonably could be operated
within the confines of the portion of the building.
Section 1703-M. Notice of final designation of program-eligible
building.
Upon compliance with section 1702-M(a), the department shall
provide to the municipality and to the building owner a written
notice of final designation as a program-eligible building for
each building that received preliminary designation under
section 1702-M(b). The notice of final designation shall include
a statement that an independent appraisal is required in order
20250HB1575PN1873 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
to document substantial rehabilitation.
Section 1704-M. Tax credit for substantial rehabilitation.
(a) General rule.--A taxpayer that is a building owner may
apply to the department for a tax credit certificate against the
taxpayer's qualified tax liability.
(b) Eligible costs.--
(1) Upon approval of the taxpayer's application by the
department, the taxpayer may claim a tax credit for the
rehabilitation and reconstruction costs of a program-eligible
building which has been substantially rehabilitated.
(2) Once substantial rehabilitation is established by
the taxpayer, the taxpayer may claim a tax credit for all
rehabilitation and reconstruction costs incurred with respect
to the program-eligible building within five years from the
date of final designation of the program-eligible building
under section 1703-M.
(c) Amount.--
(1) A taxpayer may receive a tax credit of up to 25% of
the rehabilitation and reconstruction costs of the program-
eligible building up to a maximum of $1,500,000.
(2) The tax credit shall be allowable in the year the
substantially rehabilitated program-eligible building is
first placed into service, which is the earlier of:
(i) the year in which, under the taxpayer's
depreciation practice, depreciation begins with respect
to the property; or
(ii) the year in which the property is placed in a
condition or state of readiness and availability for its
specifically assigned function.
(d) Carry forward.--Amounts of unused tax credit may be
20250HB1575PN1873 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
carried over and offset against the taxpayer's qualified tax
liability for a period not to exceed the following seven taxable
years.
Section 1705-M. (Reserved).
Section 1706-M. (Reserved).
Section 1707-M. Revocation of eligibility.
The department may revoke the designation of a building as a
program-eligible building under section 1703-M for noncompliance
with this article.
Section 1708-M. Tax credit certificates.
(a) Application.--
(1) A taxpayer may apply to the department for a tax
credit certificate under section 1704-M. The application
shall be on a form established by the department.
(2) The application shall specify a time period during
which the rehabilitation and reconstruction occurred with
respect to the program-eligible building.
(b) Issuance of certificate.--
(1) The department shall review an application received
under section 1704-M and shall determine whether the
application meets the requirements established under this
article and any related guidelines or regulations.
(2) If the department determines that an application
meets the requirements, the department shall issue a tax
credit certificate in the amount specified under section
1704-M.
(3) Tax credit certificate applications shall be
approved on a first-come, first-served basis.
(c) Carry back, refund, sale and assignment of tax credit.--
A taxpayer may not carry back, obtain a refund of, sell or
20250HB1575PN1873 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
assign an unused tax credit granted under this article.
(d) Limitation.--
(1) The total aggregate amount of tax credits approved
under this article shall not exceed $15,000,000 in a fiscal
year.
(2) In granting tax credit certificates under this
article, the department may not grant more than $15,000,000
in tax credit certificates in any fiscal year exclusive of
any tax credit certificates not awarded or returned from
previous fiscal years.
Section 1709-M. Claiming the tax credit.
Upon presentation by a taxpayer of a tax credit certificate
to the Department of Revenue, the taxpayer may claim a credit
against the qualified tax liability of the taxpayer.
Section 1710-M. Penalties.
(a) Failure to maintain operations.--A building owner that
receives a tax credit and fails to substantially maintain
existing operations in the program-eligible building for which
the tax credit is claimed for a period of five years from the
date the tax credit is first allowable shall refund to the
Commonwealth the total amount of tax credit granted.
(b) Waiver.--The department may waive the penalty in
subsection (a) if the department determines that the failure to
substantially maintain existing operations in the program-
eligible building occurred because of circumstances beyond the
building owner's control, including a natural disaster,
unforeseen industry trend or a loss of a major supplier or
market.
Section 1711-M. Program administration.
The department shall establish guidelines as may be necessary
20250HB1575PN1873 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
to administer this article, and shall post the guidelines on the
department's publicly accessible Internet website. The
guidelines shall include parameters for what constitutes
substantially maintaining existing operations of a program-
eligible building.
Section 1712-M. Report to General Assembly.
(a) Report.--
(1) No later than June 30, 2026, and September 1 of each
year thereafter, the secretary shall submit a report to the
General Assembly containing the following:
(i) A summary of the effectiveness of the tax credit
provided by this article.
(ii) The names of all taxpayers utilizing the tax
credit under this article as of the date of the report.
(iii) The amount of tax credit approved for and
utilized by each taxpayer.
(iv) Any recommendation for changes in the
calculation or administration of the tax credit.
(2) The report shall be submitted to the chairperson and
minority chairperson of the Appropriations Committee of the
Senate, the chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives, the
chairperson and minority chairperson of the Finance Committee
of the Senate and the chairperson and minority chairperson of
the Finance Committee of the House of Representatives.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report shall be public information, and all report information
shall be posted on the department's publicly accessible internet
website.
20250HB1575PN1873 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Section 3. The addition of Article XVII-M of the act shall
apply to tax years beginning after December 31, 2025.
Section 4. This act shall take effect immediately.
20250HB1575PN1873 - 12 -
1
2
3