An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in Innovate in PA Tax Credit, further providing for legislative intent, for definitions, for duties, for use of tax credits by qualified taxpayers, for sale, carryover and carryback, for sale of tax credits to qualified taxpayers, for Innovate in PA Program, for guidelines and for report and providing for second distribution report.

PRINTER'S NO. 1516
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1175
Session of
2026
INTRODUCED BY HUGHES, SANTARSIERO, COSTA, TARTAGLIONE, SCHWANK,
KIM, HAYWOOD, STREET, KANE, FONTANA, PENNYCUICK AND
CAPPELLETTI, MARCH 18, 2026
REFERRED TO FINANCE, MARCH 18, 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 Innovate in PA Tax Credit, further providing
for legislative intent, for definitions, for duties, for use
of tax credits by qualified taxpayers, for sale, carryover
and carryback, for sale of tax credits to qualified
taxpayers, for Innovate in PA Program, for guidelines and for
report and providing for second distribution report.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 1802-F 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 1802-F. Legislative intent.
It is the intent of this article to invest in innovation as a
catalyst for economic growth. Investment in the Ben Franklin
Technology Development Authority, the Ben Franklin Technology
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Partners, regional biotechnology research centers, the
[department] life sciences industry, workforce development
programs and venture capital funds will advance the
competitiveness of this Commonwealth's companies in the global
economy.
Section 2. The definition of "recipient" in section 1803-F
of the act is amended to read:
Section 1803-F. 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:
* * *
"Recipient." An entity that receives a distribution of funds
under section 1811-F(c) or section 1811-F(d).
* * *
Section 3. Section 1805-F(b) of the act is amended and the
section is amended by adding a subsection to read:
Section 1805-F. Duties.
* * *
(a.1) Sale of additional tax credits.--The department may
sell up to $350,000,000 in tax credits to qualified taxpayers.
The sale of the tax credits shall be in accordance with section
1808-F.
(b) Time of sale.--The sale authorized under subsection (a)
may not occur before October 1, 2013. The sale authorized under
subsection (a.1) may not occur prior to October 1, 2026.
Section 4. Section 1806-F(a) of the act is amended and
subsection (d) is amended by adding a paragraph to read:
Section 1806-F. Use of tax credits by qualified taxpayers.
(a) Use against insurance premiums tax liability.--A
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qualified taxpayer that purchases tax credits under [section
1805-F] section 1805-F(a) may claim the credits beginning in
calendar year 2017 against insurance premiums tax liability
incurred for a taxable year that begins on or after January 1,
2016. A qualified taxpayer that purchases tax credits under
section 1805-F(a.1) may claim the credits beginning in calendar
year 2030 against insurance premiums tax liability incurred for
a taxable year that begins on or after January 1, 2029.
* * *
(d) Limitations.--The following shall apply:
* * *
(1.1) The total amount of tax credits applied against
insurance premiums tax liability by all qualified taxpayers
in a fiscal year may not exceed $70,000,000 per year
beginning in calendar year 2030.
* * *
Section 5. Sections 1807-F(a) and 1808-F(g) of the act are
amended to read:
Section 1807-F. Sale, carryover and carryback.
(a) Carryover.--If the qualified taxpayer cannot use the
entire amount of the tax credit for the taxable year in which
the taxpayer is eligible for the credit, the excess may be
carried over to succeeding taxable years and used as a credit
against the qualified tax liability of the taxpayer for those
taxable years, provided that the credit may not be carried over
to any taxable year that begins after December 31, 2025[.], for
tax credits sold under section 1805-F(a) and after December 31,
2034, for tax credits sold under section 1805-F(a.1).
* * *
Section 1808-F. Sale of tax credits to qualified taxpayers.
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* * *
(g) Limitation.--No tax credits may be sold under section
1805-F(a) if the bidding process, upon completion, has failed to
yield at least $40,000,000 in revenue. No tax credits may be
sold under section 1805-F(a.1) if the bidding process, upon
completion, has failed to yield at least $200,000,000 in
revenue.
Section 6. Section 1811-F of the act is amended by adding a
subsection to read:
Section 1811-F. Innovate in PA Program.
* * *
(d) Second distribution.--The department shall distribute
the net proceeds received by the department as a result of the
sale of tax credits under section 1805-F(a.1) as follows:
(1) Forty percent to the Commonwealth Financing
Authority for grants or loans to support the construction of
commercial lab space, incubators, applied research and
development facilities and related public improvement and
public interest projects in the surrounding community.
(2) Eight percent to the department for grants to life
science companies and institutions of higher education for
recruitment and retention initiatives to attract and retain
exceptional life science researchers in this Commonwealth.
(3) Ten percent to the Department of Labor and Industry,
in collaboration with the department, the Department of
Education and the Department of Human Services, for grants to
fund:
(i) New partnerships between biotechnology and life
science companies, training providers and educational
institutions at all levels to create training programs
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that are free, accessible and open to students and adults
with a high school education and no previous experience.
(ii) Programs that provide opportunities to prepare
a diverse range of students from diverse backgrounds for
careers in the biotechnology or life sciences sector via
quality internships for undergraduate and graduate
students from historically underrepresented or
economically disadvantaged communities, including
programs that offer curriculum and training support with
refined "hard" skills in the sciences and "soft" skills
of professional and personal development.
(iii) Programs designed for 11th and 12th grade
students from historically underrepresented or
economically disadvantaged communities and have an
interest in biotechnology or life sciences research.
Programs would combine intensive lab training with
opportunities for students to connect with paid six-week
summer internships in cutting-edge academic and industry
research labs. Eligible programs under this subparagraph
would include programs that prepare students to go
directly into the workforce or into higher education in
STEM fields.
(iv) Programs that provide personalized
entrepreneurial education for first-time founders of
biotechnology or life science ventures of any development
stage. Programs will focus on individual needs and
utilize accredited entrepreneur coaches and expert
mentors to craft unique, educational experiences crucial
to the development of successful ventures, while
assisting them with networking with partners in the
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health care system, biotechnology and life science
community in a cooperative learning environment.
(4) Seven percent to the Ben Franklin Technology
Partners Program for use according to program guidelines.
(5) Twenty-five percent to the Venture Investment
Program for use according to program guidelines, including
traditional venture investments or impact investments. The
authority may consider impact investments based on
performance. Impact investments may not exceed 15% of the
Venture Investment Program distribution under this paragraph.
(6) Ten percent to the three regional biotechnology
research centers for distribution in equal proportions to
each regional biotechnology research center.
Section 7. Sections 1812-F and 1813-F(b) introductory
paragraph of the act are amended to read:
Section 1812-F. Guidelines.
The department, in consultation with the Commonwealth
Financing Authority, the Department of Labor and Industry, the
Department of Education, the Department of Human Services, the
authority and each regional biotechnology research center, shall
promulgate guidelines implementing this article.
Section 1813-F. Report.
* * *
(b) Contents.--The report under subsection (a) shall apply
to the distribution under section 1811-F(c) and include the
following:
* * *
Section 8. The act is amended by adding a section to read:
Section 1814-F. Second distribution report.
(a) Duties.--On or before January 1, 2027, and January 1 of
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each subsequent year, the department, in consultation with the
Commonwealth Financing Authority, the Department of Labor and
Industry, the Department of Education, the Department of Human
Services, the authority and each regional biotechnology research
center, shall:
(1) Submit a report on the implementation of the program
to all of the following:
(i) The Governor.
(ii) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(iii) The chairperson and minority chairperson of
the Appropriations Committee of the House of
Representatives.
(2) Publish the report under paragraph (1) on the
department's publicly accessible Internet website.
(b) Contents.--The report under subsection (a) shall apply
to the distribution under section 1811-F(d) and include:
(1) The name of the purchaser of premiums tax credits.
(2) The amount of premiums tax credits allocated to the
purchaser.
(3) The amount of capital the purchaser contributed for
the issuance of the tax credit certificate.
(4) The amount of any tax credits that have been
transferred under section 1810-F(e).
(5) The amount of funds received by the recipients
during the previous year.
(6) The cumulative amount of capital received by the
department in connection with the sale of the tax credits.
(7) The amount of capital remaining uninvested at the
end of the preceding calendar year.
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(8) The names and locations of businesses or other
entities receiving capital from the recipients, whether the
investment was a grant or a loan, the reason for the
investment and the amount of the investment.
(9) The total number of jobs created in this
Commonwealth by the investment and the average wages paid for
the jobs.
(10) The total number of jobs retained in this
Commonwealth as a result of the investment and the average
wages paid for the jobs.
(11) The total number of individuals participating in
the programs under section 1811-F(d)(3).
Section 9. This act shall take effect in 60 days.
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