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; providing for Internship Tax Credit Program; and promulgating regulations.

PRINTER'S NO. 3393
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2507
Session of
2026
INTRODUCED BY BERNSTINE, MAY 11, 2026
REFERRED TO COMMITTEE ON FINANCE, MAY 11, 2026
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; providing for Internship
Tax Credit Program; and promulgating regulations.
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 by adding a paragraph 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:
* * *
"Tax credit." A tax credit authorized under any of the
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following:
* * *
(16.2) Article XIX-L.
* * *
Section 2. The act is amended by adding an article to read:
ARTICLE XIX-L
INTERNSHIP TAX CREDIT PROGRAM
Section 1901-L. Scope of article.
This article relates to the Internship Tax Credit Program.
Section 1902-L. 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 taxes." Any of the taxes due under Article III,
IV, VI, VII, VIII, IX or XV or a tax under Article XVI of the
act of May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
"Business firm." An entity authorized to do business in this
Commonwealth and subject to taxes imposed under Article III, IV,
VI, VII, VIII, IX or XV.
"Department." The Department of Revenue of the Commonwealth.
"Institution of higher education." Any of the following:
(1) A community college operating under Article XIX-A of
the act of March 10, 1949 (P.L.30, No.14), known as the
Public School Code of 1949.
(2) A rural regional college established under Article
XIX-G of the Public School Code of 1949.
(3) A university within the State System of Higher
Education under Article XX-A of the Public School Code of
1949.
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(4) A State-related institution as defined in section
2001-C of the Public School Code of 1949.
(5) The Thaddeus Stevens College of Technology.
(6) An accredited private or independent college or
university.
(7) A private licensed school as defined in section 2 of
the act of December 15, 1986 (P.L.1585, No.174), known as the
Private Licensed Schools Act.
"Qualified business." A business that:
(1) operates primarily in this Commonwealth;
(2) has been continuously operating for at least three
years; and
(3) is a small business as defined in section 1702-B.
"Qualified intern." An individual who:
(1) has completed at least 30 credit hours at an
institution of higher education;
(2) is a resident of this Commonwealth; and
(3) has a minimum of a 2.5 grade point average on a 4.0
scale.
"Qualified internship." A structured program that:
(1) provides work experience or school credit for
students in their desired field;
(2) pays at least minimum wage; and
(3) is at least six weeks in length at an average of 20
hours per week.
Section 1903-L. Internship Tax Credit.
(a) Credit.--For taxable years beginning after December 31,
2026, a qualified business may claim the internship tax credit
in the taxable year in which the business employed a qualified
intern for a qualified internship and may apply the tax credit
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against the qualified business's applicable taxes.
(b) Application.-- A qualified business applying to claim an
internship tax credit must complete and submit to the department
an internship tax credit application on a form and in a manner
as determined by the department. The form shall require the
qualified business to provide the following:
(1) The names and student identification numbers or the
last four digits of the Social Security numbers of all
qualified interns for which the business is claiming the tax
credit.
(2) Proof that an employee is a qualified intern, which
may be verified through providing a transcript or enrollment
verification letter along with a grade point average from an
institution of higher education in this Commonwealth.
(3) Objectives of a qualified internship that develops
the intern's skills in the intern's chosen career field.
(c) Waiting list.--The department shall maintain a waiting
list consisting of each business firm that chooses to be
included on the list and whose application has not been approved
because all available tax credits have been awarded. A business
firm that was not awarded a tax credit due to a lack of
available tax credits shall be notified of and offered a place
on the waiting list. When tax credits become available, the
department shall award the tax credits to the business firms in
the order in which the business firms were placed on the waiting
list.
(d) Temporary increase in maximum tax credit available.--
(1) The following shall apply if all tax credits
authorized under this article have not been awarded as of
October 1 of a fiscal year:
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(i) For applications accepted by the department from
October 1 through November 30 of the fiscal year, the
limitations under section 1905-L(e) shall not apply.
(ii) The department may accept applications from
October 1 through November 30 . A business firm, including
a business firm that already applied for the maximum tax
credits available under section 1905-L(e), may apply for
up to the total amount of tax credits remaining available
for total qualified interns employed during the tax year.
(2) Prior to the award of tax credits applied for under
paragraph (1), the department shall first award tax credits
applied for by a business firm during the period October 1
through November 30 in an amount no greater than the maximum
amount of tax credits for which a business firm is eligible
under section 1905-L(e).
Section 1904-L. Carryover, carryback, refund and assignment of
credit.
(a) Carryover, carryback and refund.--A qualified business
is not entitled to carry forward, carry back or obtain a refund
of all or a portion of an unused tax credit granted to the
qualified business under this article.
(b) Sale or assignment of tax credit.--A qualified business
may not sell or assign a tax credit granted to the qualified
business under this article.
Section 1905-L. Regulations.
(a) Promulgation.--The department shall promulgate
regulations necessary to implement the provisions of this
article.
(b) Guidelines.--The department shall develop written
guidelines for the implementation of this article. The
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guidelines shall be in effect until the department promulgates
regulations for the implementation of the provisions of this
article.
(c) Statewide credit cap.--The total amount of tax credits
given to business firms under this article may not exceed
$2,500,000 per fiscal year.
(d) Restriction on applicability of credits.--No credit
granted under this article may be applied against a tax withheld
by an employer from an employee under Article III.
(e) Limitation on total tax credit claimed by a qualified
business.--
(1) The tax credit shall not exceed $2,000 per qualified
intern.
(2) The tax credit shall not exceed $10,000 total per
tax year.
Section 1906-L. Tax compliance.
The provisions of Article XVII-A.1 apply to the application
of this article.
Section 1907-L. Applicability.
(a) Taxable year.--The provisions of this article shall
apply to taxable years beginning after December 31, 2026.
(b) Expiration of tax credit.--The department may not
approve a tax credit under this article for a taxable year
beginning after December 31, 2032.
Section 3. This act shall take effect in 60 days.
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