An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for sustainable aviation fuel tax credit.

PRINTER'S NO. 1874
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1417
Session of
2026
INTRODUCED BY ROBINSON, BARTOLOTTA, PICOZZI, PISCIOTTANO,
MASTRIANO AND LANGERHOLC, JULY 8, 2026
REFERRED TO FINANCE, JULY 8, 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," providing for sustainable aviation fuel tax
credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XVII- M
SUSTAINABLE AVIATION FUEL TAX CREDIT
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:
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"ASTM." The American Society for Testing and Materials
International, or its successor.
"Department." The Department of Revenue of the Commonwealth.
"Project facility." A facility located in this Commonwealth
that is owned by a qualified taxpayer that manufactures
sustainable aviation fuel.
"Qualified taxpayer." An entity that satisfies all of the
following:
(1) Owns and operates a project facility .
(2) Has entered into a commitment letter under section
1702-M(b) to produce sustainable aviation fuel at a project
facility placed into service on or after the effective date
of this section.
(3) Has made a capital investment of at least
$150,000,000 to construct and place into service the project
facility.
(4) Has created a minimum aggregate total of 400 new
jobs and permanent jobs, no fewer than 50 of which are
permanent jobs.
(5) Has made good faith efforts to recruit and employ,
and to encourage any contractors or subcontractors to recruit
and employ, workers from the local labor market for
employment during the construction of the project facility.
(6) Has demonstrated that the new jobs created at the
project facility are paid at least the prevailing minimum
wage and benefit rates for each craft or classification as
determined by the Department of Labor and Industry.
(7) The construction work to place a project facility
into service shall be performed subject to the act of March
3, 1978 (P.L.6, No.3), known as the Steel Products
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Procurement Act.
(8) Is not a contributor to the calculation of the in-
State production volume of biodiesel, biodiesel blend, diesel
fuel or renewable diesel as those terms are defined in the
act of July 10, 2008 (P.L.1009, No.78), known as the Biofuel
Development and In-State Production Incentive Act, as of the
effective date of this definition.
"Sustainable aviation fuel." Liquid fuel that complies with
the following:
(1) Can be used to fuel an aircraft.
(2) Is not kerosene.
(3) Is not derived from palm fatty acid distillates or
petroleum, as defined under ASTM D1655-26 (2026).
(4) Meets the requirements of:
(i) ASTM D7566-22 (2022);
(ii) the Fischer -Tropsch provisions of ASTM D1655,
Annex A1 (2018); or
(iii) a similar standard adopted by the department
in a notice published in the Pennsylvania Bulletin.
"Tax credit." A tax credit authorized under this article.
Section 1702-M . Eligibility.
(a) Demonstration.--In order to be eligible to receive a tax
credit, an entity shall demonstrate the following:
(1) The entity meets the requirements of a qualified
taxpayer.
(2) Confirmation that the entity has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined by
assessment or determination by the department and not under
timely appeal.
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(b) Commitment letter.--An entity that applies for and
receives a tax credit under this article shall enter into a
commitment letter with the Department of Community and Economic
Development to prescribe the date by which the project facility
will begin to produce sustainable aviation fuel at the project
facility.
Section 1703-M. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to an amount not
less than $1 per gallon of sustainable aviation fuel produced at
a project facility by a qualified taxpayer.
(b) Production incentive for feedstock source.--An
additional tax credit of an amount equal to 25¢ per gallon of
sustainable aviation fuel produced at a project facility by a
qualified taxpayer shall be available for sustainable aviation
fuel produced using feedstocks sourced from this Commonwealth or
from states that are geographically contiguous to this
Commonwealth.
(c) Production incentive for greenhouse gas emission
reduction.--An additional tax credit of an amount equal to 25¢
per gallon of sustainable aviation fuel produced at a project
facility by a qualified taxpayer shall be available for
sustainable aviation fuel that achieves no less than a 30%
lifecycle greenhouse gas emission reduction compared to
conventional jet fuel.
(d) Limitation.--The amount of the tax credit approved under
subsection (f) may not exceed an amount equal to $1.50 per
gallon of sustainable aviation fuel produced at a project
facility by a qualified taxpayer.
(e) Application.--
(1) A qualified taxpayer may apply to the department for
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a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for sustainable
aviation fuel produced at the project facility during the
prior calendar year.
(3) The application must be on a form required by the
department and include the following:
(i) information required by the department to
document the amount of sustainable aviation fuel produced
at the project facility;
(ii) information required by the department to
verify that the applicant is a qualified taxpayer; and
(iii) any other information that the department
deems appropriate to review the application.
(f) Review and approval.--
(1) The department shall review an application filed
under subsection (e) and shall issue an approval or
disapproval by May 1.
(2) Upon approval, the department shall issue a
certificate stating the amount of the tax credit granted for
sustainable aviation fuel produced at the project facility in
the prior calendar year.
(g) Availability of tax credits.--
(1) Each fiscal year, $30,000,000 in tax credits shall
be made available to the department in accordance with this
article.
(2) The department shall issue up to $30,000,000 in a
fiscal year to qualified taxpayers that meet the
qualifications to receive a tax credit.
(3) If the aggregate amount of eligible tax credit
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applications exceeds $30,000,000 in a fiscal year, the
department shall issue tax credits to qualified taxpayers
that meet the qualifications to receive a tax credit in
amounts proportional to the applicants' relative sustainable
aviation fuel certified production volumes in a fiscal year.
Section 1704-M. Use of tax credits.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1706-M, a qualified taxpayer must first use
a tax credit against the qualified tax liability incurred in the
taxable year for which the tax credit was approved.
(b) Eligibility.--The tax credit may be applied against up
to 20% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
Section 1705-M. Carryover, carryback and refund.
A tax credit may not be carried back, carried forward or be
used to obtain a refund.
Section 1706-M. Sale or assignment.
(a) Authorization.--If a qualified taxpayer holds a tax
credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign a
tax credit, in whole or in part, provided the sale is effective
by the close of the following calendar year.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must submit an application for the sale or assignment of the
tax credit with the department. The application must be on a
form required by the department.
(2) To approve an application, the department must
receive a finding from the department that the applicant has:
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(i) filed all required State tax reports and returns
for all applicable taxable years; and
(ii) paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
(c) Approval.--Upon approval by the department, the
qualified taxpayer may sell or assign, in whole or in part, the
tax credit.
Section 1707-M. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1706-M
must claim the tax credit in the calendar year in which the
purchase or assignment is made.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1706-M may use against any one
qualified tax liability may not exceed 50% of any of the
qualified tax liabilities of the purchaser or assignee for the
taxable year.
(c) Resale and assignment.--
(1) A purchaser under section 1706-M may not sell or
assign the purchased tax credit.
(2) An assignee under section 1706-M may not sell or
assign the assigned tax credit.
(d) Notice.--The purchaser or assignee under section 1706-M
shall notify the department of the seller or assignor of the tax
credit in compliance with procedures specified by the
department.
Section 1708-M. Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect, in writing, according
to procedures established by the department, to transfer all or
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a portion of the tax credit to shareholders, members or partners
in proportion to the share of the entity's distributive income
to which the shareholders, members or partners are entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 20% of qualified tax liabilities for
the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
Section 1709-M. Guidelines and regulations.
The department shall develop written guidelines for the
implementation of this article. The guidelines shall be in
effect until the department promulgates regulations for the
implementation of this article.
Section 1710-M. Report to General Assembly.
(a) Report.--
(1) No later than the year after which tax credits are
first awarded under this article, and each October 1
thereafter, the department shall submit a report to the
General Assembly summarizing the effectiveness of the tax
credit. The report shall include the names of all qualified
taxpayers utilizing the tax credit as of the date of the
report and the amount of tax credits approved for, utilized
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by or sold or assigned by each qualified taxpayer. The report
shall be submitted to all of the following:
(i) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(ii) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(iii) The chairperson and minority chairperson of
the Transportation Committee of the Senate.
(iv) The chairperson and minority chairperson of the
Transportation Committee of the House of Representatives.
(v) The chairperson and minority chairperson of the
Environmental Resources and Energy Committee of the
Senate.
(vi) The chairperson and minority chairperson of the
Energy Committee of the House of Representatives.
(vii) The chairperson and minority chairperson of
the Finance Committee of the Senate.
(viii) The chairperson and minority chairperson of
the Finance Committee of the House of Representatives.
(2) In addition to the information required under
paragraph (1), the report shall include the following
information in a manner separated by geographic location
within this Commonwealth:
(i) The amount of tax credits claimed by qualified
taxpayers during the fiscal year.
(ii) The total number of new jobs and permanent jobs
created by qualified taxpayers during the fiscal year,
including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
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report under subsection (a) shall be public information, and all
report information shall be posted on the department's publicly
accessible Internet website.
Section 2. This act shall take effect in 60 days.
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