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 the Pennsylvania National Guard employer tax credit.

PRINTER'S NO. 347
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 401
Session of
2025
INTRODUCED BY PENNYCUICK, BARTOLOTTA, FONTANA, COLLETT,
HUTCHINSON, COSTA, HUGHES, BROWN, DUSH AND FARRY,
MARCH 6, 2025
REFERRED TO FINANCE, MARCH 6, 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; and providing for the
Pennsylvania National Guard employer 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:
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"Tax credit." A tax credit authorized under any of the
following:
* * *
(16.2) Article XIX-L.
* * *
Section 2. The act is amended by adding an article to read:
ARTICLE XIX-L
PENNSYLVANIA NATIONAL GUARD
EMPLOYER TAX CREDIT
Section 1901-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:
"Department." The Department of Revenue of the Commonwealth.
"Pennsylvania National Guard." The Pennsylvania Army
National Guard and the Pennsylvania Air National Guard.
"Tax credit." The tax credit available to employers of
members of any reserve component of the armed forces under this
article.
"Taxpayer." An entity subject to tax under Article III or
IV.
Section 1902-L. Tax credit for employment.
(a) Tax credit available.--A taxpayer is eligible for a tax
credit as provided in subsection (b) against the tax imposed
under Article III or IV, but shall not include any tax withheld
by an employer from an employee under Article III, if:
(1) the taxpayer hires an active member of the
Pennsylvania National Guard;
(2) an employee of the taxpayer enlists in the
Pennsylvania National Guard; or
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(3) an employee of the taxpayer reenlists in the
Pennsylvania National Guard.
(b) Maximum tax credit.--A taxpayer may claim a tax credit
in the amount of $1,000 for each full-time employee who
qualifies under subsection (a)(1), (2) or (3). A taxpayer may
claim a tax credit under this section only once with respect to
each qualified employee and may not claim a tax credit if a
previous employer of the employee claimed a tax credit.
(c) Claim period.--Claims for a tax credit shall be filed
for the first taxable year for which the taxpayer was entitled
to claim the tax credit. Failure to comply with this subsection
shall constitute a waiver of the tax credit.
Section 1903-L. Carryover and carryback of tax credit.
(a) Excess tax credit.--If a taxpayer cannot use the entire
amount of the tax credit for the first taxable year in which the
employer is eligible for the tax credit, the excess may be
carried over to succeeding taxable years and used as a tax
credit against the qualified tax liability of the taxpayer for
those taxable years.
(1) Each time the tax credit is carried over to a
succeeding taxable year, it shall be reduced by the amount
that was used as a credit during the immediately preceding
taxable year.
(2) The tax credit provided by this article may be
carried over and applied to succeeding taxable years for no
more than three taxable years following the first taxable
year for which the taxpayer was entitled to claim the tax
credit.
(b) No carryback.--A taxpayer is not entitled to carry back
or obtain a refund of an unused tax credit.
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Section 1904-L. Total amount of tax credits.
The total amount of tax credits authorized by this article
shall not exceed $5,000,000 in each fiscal year. If the tax
credits exceed the $5,000,000 cap in a given year, the tax
credits shall be allocated on a pro rata basis.
Section 1905-L. Regulations.
The department shall prepare any forms that may be necessary
to claim a tax credit, may require proof of the claim for the
tax credit and may adopt rules and promulgate regulations to
administer the tax credit.
Section 3. This act shall apply to tax years beginning after
December 31, 2025.
Section 4. This act shall take effect in 30 days.
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