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PRINTER'S NO. 141
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 191
Session of
2025
INTRODUCED BY STREET, COSTA AND KANE, JANUARY 29, 2025
REFERRED TO FINANCE, JANUARY 29, 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; in research and
development tax credit, further providing for limitation on
credits; and providing for Angel Investment Tax Credit.
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:
* * *
(8.2) Article XVII-M.
* * *
Section 2. Section 1709-B(a) of the act is amended to read:
Section 1709-B. Limitation on Credits.--(a) The total
amount of credits approved by the department shall not exceed
[sixty million dollars ($60,000,000)] one hundred million
dollars ($100,000,000) in any fiscal year. Of that amount,
[twelve million dollars ($12,000,000)] twenty million dollars
($20,000,000) shall be allocated exclusively for small
businesses. However, if the total amounts allocated to either
the group of applicants exclusive of small businesses or the
group of small business applicants is not approved in any fiscal
year, the unused portion will become available for use by the
other group of qualifying taxpayers.
* * *
Section 3. The act is amended by adding an article to read:
ARTICLE XVII-M
ANGEL INVESTMENT TAX CREDIT
Section 1701-M. Scope of article.
This article relates to the Angel Investment Tax Credit.
Section 1702-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:
"Accredited investor." Any of the following:
(1) An individual whose net worth or joint net worth
with the individual's spouse exceeds $1,000,000.
(2) An individual who had individual income in excess of
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$200,000 in each of the two most recent years or joint income
with that individual's spouse in excess of $300,000 in each
of those years and has a reasonable expectation of reaching
the same income level in the current year.
(3) An entity in which all of the equity owners meet
paragraph (1) or (2).
"Business plan." An outline of business structure and a
formal statement of business goals, including an explanation of
how the goals are anticipated to be achieved.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Pass-through entity." A partnership as defined in section
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Program." The Angel Investment Tax Credit Program
established in this article.
"Qualified business venture." A business that meets all of
the following criteria:
(1) Is headquartered or that will establish its
headquarters in this Commonwealth prior to the time that the
taxpayer is eligible to apply for the tax credit.
(2) Maintains its headquarters in this Commonwealth for
at least five years after the taxpayer applied for the tax
credit.
(3) Employs at least 51% of its employees in this
Commonwealth at the time that the taxpayer applies for the
tax credit.
(4) Has fewer than 100 employees at the time that the
taxpayer applies for the tax credit.
(5) Has been in operation in this Commonwealth for not
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more than five consecutive years at the time that the
taxpayer applies for the tax credit.
(6) Has not received more than $2,000,000, in the
aggregate, in private equity investments of which not more
than $1,000,000 was invested by a single investor.
"Qualified investment." A payment of money or its equivalent
for a private equity interest in a qualified business venture.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV or VI. The term shall include the
liability for taxes imposed under Article III on an owner of a
pass-through entity.
"Secretary." The Secretary of Community and Economic
Development of the Commonwealth.
"Tax credit." The Angel Investment Tax Credit authorized
under this article.
"Taxpayer." A person subject to tax under Article III, IV or
VI. The term includes the shareholder, owner or member of a
pass-through entity that receives a tax credit.
Section 1703-M. Angel Investment Tax Credit Program.
The Angel Investment Tax Credit Program is established in the
department. The program shall:
(1) Create a business environment that attracts and
encourages early-stage financing for businesses with the
potential for high growth.
(2) Increase capital investment.
(3) Encourage job creation.
Section 1704-M. Qualified business plans.
In order for a business plan to be qualified, the business
plan must:
(1) Indicate the potential for increasing jobs in this
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Commonwealth.
(2) Indicate the potential for increasing capital
investment in this Commonwealth.
(3) Specify that the plan is based upon the development
or commercialization of intellectual property for which
either of the following apply:
(i) patent protection under 35 U.S.C. (relating to
patents) has been secured or is pending; or
(ii) a copyright under 17 U.S.C. (relating to
copyrights) has been secured or is pending.
Section 1705-M. Credit for qualified investment.
(a) Application.--A taxpayer that made a qualified
investment in a taxable year may apply for a tax credit. The
application shall be on a form as required by the department and
shall include all of the following:
(1) The name and address of the applicant.
(2) The name and address of the business in which the
taxpayer has invested.
(3) A certified copy of the qualified business plan.
(4) Documentation that the applicant is an accredited
investor.
(5) Documentation that the business in which the
taxpayer has invested is a qualified business venture.
(6) Documentation that the qualified investment has been
made by the applicant.
(7) Any other information required by the department.
(b) Review.--The department, in conjunction with the
Department of Revenue, shall review the application and
determine if:
(1) All requirements established under this article have
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been met.
(2) The applicant has filed all required State tax
reports and returns for all taxable years and paid any
balance of State tax due as determined by the Department of
Revenue.
(c) Approval.--Upon being satisfied under subsection (b),
the department shall approve the application and award the
taxpayer a tax credit for the taxable year in the amount equal
to 25% of the taxpayer's qualified investment made during the
taxable year.
(d) Notification.--The department shall notify the taxpayer
of the amount of the taxpayer's tax credit within 30 days after
approval by the department.
Section 1706-M. Carryover, application of tax credit,
carryback, refund and assignment.
(a) Carryover.--If the taxpayer cannot use the entire amount
of the tax credit for the taxable year in which the tax credit
is first approved, 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. Each time
that the tax credit is carried over to a succeeding taxable
year, the tax credit shall be reduced by the amount that was
used as a credit during the immediately preceding taxable year.
The tax credit may be carried over and applied to succeeding
taxable years for no more than seven taxable years following the
first taxable year for which the taxpayer was entitled to claim
the tax credit.
(b) Application of tax credit.--A tax credit approved by the
department for a qualified investment in a taxable year shall
first be applied against the taxpayer's qualified tax liability
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for the current taxable year as of the date on which the tax
credit was approved before the tax credit is applied against any
tax liability under subsection (a).
(c) Carryback or refund.--A taxpayer is not entitled to
carry back or obtain a refund of an unused tax credit.
(d) Sale or assignment.--A taxpayer, upon application to and
approval by the department in consultation with the Department
of Revenue, may sell or assign, in whole or in part, a tax
credit granted to the taxpayer if the taxpayer does not have a
qualified tax liability against which the tax credit may be
applied in the current taxable year. The department shall
establish guidelines, in consultation with the Department of
Revenue, for the approval of applications under this subsection.
Before an application is approved, the Department of Revenue
must make a finding that the taxpayer and the taxpayer's
assignee have filed all required State tax reports and returns
for all taxable years and paid any balance of State tax due as
determined by the Department of Revenue.
(e) Purchasers and assignees.--The purchaser or assignee of
all or a portion of a tax credit under subsection (d) shall
immediately claim the credit in the taxable year in which the
purchase or assignment is made, although the purchaser or
assignee may carry over unused tax credit to the succeeding
taxable year for up to two years. The amount of the tax credit
that a purchaser or assignee may use against any one qualified
tax liability may not exceed 75% of the qualified tax liability
for the taxable year. The purchaser or assignee may not carry
back or obtain a refund of or sell or assign the tax credit. The
purchaser or assignee shall notify the department, and the
department shall notify the Department of Revenue of the seller
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or assignor of the tax credit in compliance with procedures
specified by the department, in consultation with the Department
of Revenue.
Section 1707-M. Time limitation.
A taxpayer shall not be entitled to a tax credit for
qualified investments incurred in taxable years ending after
December 31, 2033 .
Section 1708-M. Limitation on tax credits.
(a) Total amount.--The total amount of tax credits approved
by the department in any calendar year may not exceed
$20,000,000.
(b) Allocation.--Tax credits shall be allocated by the
department on a first-come, first-served basis.
Section 1709-M. Shareholder, owner or member pass-through.
(a) Shareholder entitlement.--If a Pennsylvania S
corporation does not have an eligible tax liability against
which the tax credit may be applied, a shareholder of the
Pennsylvania S corporation shall be entitled to a tax credit
equal to the tax credit determined for the Pennsylvania S
corporation for the taxable year multiplied by the percentage of
the Pennsylvania S corporation's distributive income to which
the shareholder is entitled.
(b) Pass-through entity entitlement.--If a pass-through
entity other than a Pennsylvania S corporation does not have tax
liability against which the tax credit may be applied, an owner
or member of the pass-through entity shall be entitled to a tax
credit equal to the tax credit determined for the pass-through
entity for the taxable year multiplied by the percentage of the
pass-through entity's distributive income to which the owner or
member is entitled.
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(c) Additional credit.--
(1) Except as provided under paragraph (2), the tax
credit provided under subsection (a) or (b) shall be in
addition to any other tax credit to which a shareholder,
owner or member of a pass-through entity is otherwise
entitled under this article.
(2) A pass-through entity and a shareholder, owner or
member of a pass-through entity may not claim a tax credit
for the same qualified investment.
Section 1710-M. Repayment.
The department shall require a taxpayer to repay a tax credit
granted to the taxpayer where the department, in conjunction
with the Department of Revenue, determines that any of the
following conditions exist:
(1) The qualified business venture did not satisfy the
requirements of the qualified business plan submitted at the
time of application.
(2) The business in which the taxpayer made the
qualified investment is no longer a qualified business
venture.
(3) The taxpayer received the tax credit as a result of
fraud.
Section 1711-M. Recapture.
A taxpayer shall repay to the Commonwealth any or all of the
tax credit claimed by the taxpayer if the taxpayer withdraws any
portion of the taxpayer's qualified investment at any time
during the period commencing with the date of the taxpayer's
investment through the taxable year that the taxpayer claims or
carries over unused portions of the tax credit under section
1706-M. The amount of the repayment shall be calculated as
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follows:
(1) If the withdrawal occurs in the taxable year in
which the investment was made or in the taxable year
following the taxable year in which the investment was made,
the aggregate amount of the tax credit claimed by the
taxpayer during both taxable years shall be repaid to the
Commonwealth.
(2) If the withdrawal occurs in the second taxable year
following the taxable year in which the investment was made
or any subsequent taxable year, the amount of the tax credit
claimed by the taxpayer in the taxable year in which the
withdrawal occurs shall be repaid to the Commonwealth.
Section 1712-M. Reports.
(a) Annual report.--The secretary shall submit an annual
report to the chairperson and minority chairperson of each
standing committee in the Senate and the chairperson and
minority chairperson of each standing committee in the House of
Representatives with jurisdiction over the department and the
Department of Revenue as follows:
(1) The report shall indicate the effectiveness of the
tax credit.
(2) The report shall be submitted no later than March 15
following the fiscal year in which the tax credit was
approved.
(3) Notwithstanding any law providing for the
confidentiality of tax records, the report shall include the
following:
(i) The names of all taxpayers awarded the tax
credit.
(ii) The names of all taxpayers utilizing the tax
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credit.
(iii) The amount of tax credits approved and
utilized by each taxpayer.
(iv) The names and locations of the qualified
business ventures for which the tax credit was awarded.
(4) The report may include any recommendation for
changes in the calculation or administration of the tax
credit.
(b) Public record.--The report shall be considered a public
record as defined in section 102 of the act of February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
Section 1713-M. Termination.
The department may not approve a tax credit for qualified
investments incurred in taxable years ending after December 31,
2033 .
Section 1714-M. Guidelines.
The department, in consultation with the Department of
Revenue, shall develop written guidelines for the implementation
and administration of this article. The guidelines shall be
posted on the department's publicly accessible Internet website .
Section 4. The addition of Article XVII-M of the act shall
apply to qualified investments made in taxable years beginning
after December 31, 2025.
Section 5. This act shall take effect as follows:
(1) The following shall take effect immediately:
The addition of Article XVII-M of the act.
Section 3 of this act.
This section.
(2) The remainder of this act shall take effect in 60
days.
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