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 tax credits relating to economic development.

PRINTER'S NO. 3740
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2685
Session of
2026
INTRODUCED BY MATZIE, T. DAVIS, BURGOS, NEILSON, INGLIS, HILL-
EVANS, SANCHEZ, PROKOPIAK, GOUGHNOUR, D. WILLIAMS, OTTEN,
CIRESI AND FLEMING, JUNE 30, 2026
REFERRED TO COMMITTEE ON FINANCE, JUNE 30, 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 and providing for tax
credits relating to economic development.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. 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 definition 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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"E conomic development tax credit." A tax credit established
for the purpose of long-term, strategic planning to improve a
community's financial well-being and quality of life, with a
primary focus on any of the following:
(1) Business creation, attraction, retention or
expansion.
(2) Economic growth.
(3) Expanding the community's local tax base to fund
public services, including schools, roads and parks.
(4) Improving infrastructure to make the community a
more attractive place to live and work.
* * *
Section 2. The act is amended by adding a section to read:
Section 1710-A.1. Tax credits relating to economic development.
(a) Requirements.--An entity that is awarded an economic
development tax credit shall:
(1) C omply with all provisions and requirements of the
the act of August 15, 1961 (P.L.987, No.442), known as the
Pennsylvania Prevailing Wage Act.
(2) Only employ individuals who are Pennsylvania
residents.
(3) Use 100% materials sourced from this Commonwealth.
If it is impossible to source 100% of the materials from this
Commonwealth, the entity shall source the material from the
United States, but not outside of the United States.
(b) Duty of Department of Community and Economic
Development.--The Department of Community and Economic
Development shall annually audit all entities that were awarded
an economic development tax credit to ensure that the entity is
in compliance with subsection (a).
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(c) Penalty.--An entity that is awarded an economic
development tax credit and fails to comply with the requirements
of this section shall repay to the Commonwealth the amount of
the economic development tax credit awarded.
Section 3. The addition of section 1710-A.1 of the act shall
apply to a tax credit awarded on or after the effective date of
this section.
Section 4. This act shall take effect in 60 days.
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