An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for small business minimum wage increase tax credit.

PRINTER'S NO. 952
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 853
Session of
2025
INTRODUCED BY HAYWOOD, KIM, TARTAGLIONE, KANE, COSTA, SCHWANK,
L. WILLIAMS, PISCIOTTANO AND SAVAL, JUNE 18, 2025
REFERRED TO FINANCE, JUNE 18, 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," providing for small business minimum wage
increase 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 XIX-L
SMALL BUSINESS MINIMUM WAGE INCREASE TAX CREDIT
Section 1901-L. Scope of article.
This article relates to the small business minimum wage
increase tax credit.
Section 1902-L. Definitions.
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"Department." The Department of Revenue of the Commonwealth.
"Employer." As defined in section 3 of the act of January
17, 1968 (P.L.11, No.5), known as The Minimum Wage Act of 1968,
and has 50 or fewer full-time equivalent employees during the
taxable year.
"State tax liability." Any of the taxes due under Article
III, IV, VII, VIII, IX or XV. The term shall not include any tax
withheld by an employer from an employee under Article III.
"Tax credit." The small business minimum wage increase tax
credit established under section 1903-L.
Section 1903-L. Small business minimum wage increase tax
credit.
(a) Credit.--For taxable years beginning after an increase
to the minimum wage under section 4 of the act of January 17,
1968 (P.L.11, No.5), known as The Minimum Wage Act of 1968, an
employer may claim a tax credit, as calculated in subsection
(b), against the employer's State tax liability.
(b) Amount.--The tax credit under subsection (a) shall be
determined by calculating the difference between the amount of
compensation paid in this Commonwealth to employees who were
paid less than the minimum wage in effect in that tax year and
the amount of compensation currently paid to those employees.
The amount of the tax credit shall be the following percentages:
(1) Fifty percent for the reporting period in the first
taxable year after the minimum wage increase under subsection
(a).
(2) Twenty-five percent for the reporting period in the
second taxable year after the minimum wage increase under
subsection (a).
(c) Expiration.--The tax credit under this section shall
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expire in the third taxable year after the minimum wage increase
under subsection (a).
Section 1904-L. Carryover, carryback, refund and assignment of
credit.
(a) Carry.--If the amount of the tax credit allowed under
this article exceeds the employer's tax liability in the tax
year in which the tax credit is approved, the excess tax credit
may be carried over to succeeding tax years for a period not to
exceed three years to reduce the employer's tax liability during
those tax years in accordance with the following:
(1) A tax credit that is carried over to succeeding tax
years must be applied first to the earliest tax year
possible.
(2) Any credit remaining after three tax years following
the initial approval of a tax credit under this article shall
not be refunded or credited to the employer.
(b) No carryback or refund.--An employer approved for a tax
credit may not carry back or obtain a refund for any portion of
an unused tax credit granted to the employer under this article.
(c) Pass-through entity.--If an employer is a pass-through
entity and has an unused tax credit under section 1903-L, the
employer may elect in writing, according to procedures
established by the department, to transfer all or a portion of
the credit to shareholders, members or partners in proportion to
the share of the entity's distributive income to which the
shareholder, member or partner is entitled in accordance with
the following:
(1) The same unused tax credit under subsection (b) may
not be claimed by:
(i) the pass-through entity; and
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(ii) a shareholder, member or patron of the pass-
through entity.
(2) A shareholder, member or partner of a pass-through
entity to whom a credit is transferred under this subsection
shall immediately claim the credit in the taxable year in
which the transfer is made. The shareholder, member or
partner may not carry forward, carry back, obtain a refund of
or sell or assign the credit.
Section 1905-L. Departmental duties.
The department shall publish guidelines and may promulgate
regulations necessary for the implementation and administration
of this article.
Section 2. This act shall take effect in 60 days.
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