PRIOR PRINTER'S NOS. 1310, 1694
PRINTER'S NO. 2076
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1219
Session of
2023
INTRODUCED BY BRIGGS, FREEMAN, MADDEN, SCHLOSSBERG, SANCHEZ,
HILL-EVANS, GUENST, GREINER, HANBIDGE, WEBSTER, NEILSON,
SCOTT, HOGAN, GREEN, PIELLI AND TAKAC, MAY 24, 2023
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
OCTOBER 2, 2023
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 corporate net income tax, further providing
for DEFINITIONS, FOR IMPOSITION OF TAX AND FOR manufacturing
innovation and reinvestment deduction.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 407.7 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 1. SECTION 401(3)4(C)(1) AND (2) OF THE ACT OF MARCH
4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, ARE
AMENDED TO READ:
SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND
PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING
ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
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CLEARLY INDICATES A DIFFERENT MEANING:
* * *
(3) "TAXABLE INCOME." * * *
4. * * *
(C) (1) THE NET LOSS DEDUCTION SHALL BE THE LESSER OF:
(A) (I) FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 2007,
TWO MILLION DOLLARS ($2,000,000);
(II) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006,
THE GREATER OF TWELVE AND ONE-HALF PER CENT OF TAXABLE INCOME AS
DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR
THREE MILLION DOLLARS ($3,000,000);
(III) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2008,
THE GREATER OF FIFTEEN PER CENT OF TAXABLE INCOME AS DETERMINED
UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR THREE
MILLION DOLLARS ($3,000,000);
(IV) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2009,
THE GREATER OF TWENTY PER CENT OF TAXABLE INCOME AS DETERMINED
UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR THREE
MILLION DOLLARS ($3,000,000);
(V) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2013, THE
GREATER OF TWENTY-FIVE PER CENT OF TAXABLE INCOME AS DETERMINED
UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR FOUR MILLION
DOLLARS ($4,000,000);
(VI) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2014,
THE GREATER OF THIRTY PER CENT OF TAXABLE INCOME AS DETERMINED
UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR FIVE MILLION
DOLLARS ($5,000,000);
(VII) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2017,
THIRTY-FIVE PER CENT OF TAXABLE INCOME AS DETERMINED UNDER
SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2;
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(VIII) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2018,
FORTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE 1
OR, IF APPLICABLE, SUBCLAUSE 2; [OR]
(IX) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2023,
FIFTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE 1
OR, IF APPLICABLE, SUBCLAUSE 2;
(X) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2024,
SIXTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE 1
OR, IF APPLICABLE, SUBCLAUSE 2;
(XI) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2025,
SEVENTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE
1 OR, IF APPLICABLE, SUBCLAUSE 2; OR
(XII) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2026,
EIGHTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE
1 OR, IF APPLICABLE, SUBCLAUSE 2; OR
(B) THE AMOUNT OF THE NET LOSS OR LOSSES WHICH MAY BE
CARRIED OVER TO THE TAXABLE YEAR OR TAXABLE INCOME AS DETERMINED
UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2.
* * *
(2) (A) A NET LOSS FOR A TAXABLE YEAR MAY ONLY BE CARRIED
OVER PURSUANT TO THE FOLLOWING SCHEDULE:
TAXABLE YEAR CARRYOVER
1981 1 TAXABLE YEAR
1982 2 TAXABLE YEARS
1983-1987 3 TAXABLE YEARS
1988 2 TAXABLE YEARS PLUS
1 TAXABLE YEAR
STARTING WITH THE
1995 TAXABLE YEAR
1989 1 TAXABLE YEAR PLUS
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2 TAXABLE YEARS
STARTING WITH THE
1995 TAXABLE YEAR
1990-1993 3 TAXABLE YEARS
STARTING WITH THE
1995 TAXABLE YEAR
1994 1 TAXABLE YEAR
1995-1997 10 TAXABLE YEARS
1998 AND THEREAFTER 20 TAXABLE YEARS
(B) THE EARLIEST NET LOSS SHALL BE CARRIED OVER TO THE
EARLIEST TAXABLE YEAR TO WHICH IT MAY BE CARRIED UNDER THIS
SCHEDULE. THE TOTAL NET LOSS DEDUCTION ALLOWED IN ANY TAXABLE
YEAR SHALL NOT EXCEED:
(I) TWO MILLION DOLLARS ($2,000,000) FOR TAXABLE YEARS
BEGINNING BEFORE JANUARY 1, 2007.
(II) THE GREATER OF TWELVE AND ONE-HALF PER CENT OF THE
TAXABLE INCOME AS DETERMINED UNDER SUBCLAUSE 1 OR, IF
APPLICABLE, SUBCLAUSE 2 OR THREE MILLION DOLLARS ($3,000,000)
FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2006.
(III) THE GREATER OF FIFTEEN PER CENT OF THE TAXABLE INCOME
AS DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2
OR THREE MILLION DOLLARS ($3,000,000) FOR TAXABLE YEARS
BEGINNING AFTER DECEMBER 31, 2008.
(IV) THE GREATER OF TWENTY PER CENT OF THE TAXABLE INCOME AS
DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR
THREE MILLION DOLLARS ($3,000,000) FOR TAXABLE YEARS BEGINNING
AFTER DECEMBER 31, 2009.
(V) THE GREATER OF TWENTY-FIVE PER CENT OF TAXABLE INCOME AS
DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR
FOUR MILLION DOLLARS ($4,000,000) FOR TAXABLE YEARS BEGINNING
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AFTER DECEMBER 31, 2013.
(VI) THE GREATER OF THIRTY PER CENT OF TAXABLE INCOME AS
DETERMINED UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 OR
FIVE MILLION DOLLARS ($5,000,000) FOR TAXABLE YEARS BEGINNING
AFTER DECEMBER 31, 2014.
(VII) THIRTY-FIVE PER CENT OF TAXABLE INCOME AS DETERMINED
UNDER SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 FOR TAXABLE
YEARS BEGINNING AFTER DECEMBER 31, 2017.
(VIII) FORTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER
SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 FOR TAXABLE YEARS
BEGINNING AFTER DECEMBER 31, 2018.
(IX) FIFTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER
SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 FOR TAXABLE YEARS
BEGINNING AFTER DECEMBER 31, 2023.
(X) SIXTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER
SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 FOR TAXABLE YEARS
BEGINNING AFTER DECEMBER 31, 2024.
(XI) SEVENTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER
SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 FOR TAXABLE YEARS
BEGINNING AFTER DECEMBER 31, 2025.
(XII) EIGHTY PER CENT OF TAXABLE INCOME AS DETERMINED UNDER
SUBCLAUSE 1 OR, IF APPLICABLE, SUBCLAUSE 2 FOR TAXABLE YEARS
BEGINNING AFTER DECEMBER 31, 2026.
* * *
SECTION 2. SECTION 402(B) OF THE ACT, AMENDED JULY 8, 2022
(P.L.513, NO.53), IS AMENDED TO READ:
SECTION 402. IMPOSITION OF TAX.--* * *
(B) THE ANNUAL RATE OF TAX ON CORPORATE NET INCOME IMPOSED
BY SUBSECTION (A) FOR TAXABLE YEARS BEGINNING FOR THE CALENDAR
YEAR OR FISCAL YEAR ON OR AFTER THE DATES SET FORTH SHALL BE AS
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FOLLOWS:
TAXABLE YEAR TAX RATE
JANUARY 1, 1995,
THROUGH DECEMBER
31, 2022 9.99%
JANUARY 1, 2023,
THROUGH DECEMBER
31, 2023 [8.99%] 7.99%
JANUARY 1, 2024,
THROUGH DECEMBER
31, 2024 [8.49%] 6.99%
JANUARY 1, 2025,
THROUGH DECEMBER
31, 2025 [7.99%] 5.99%
JANUARY 1, 2026,
[THROUGH DECEMBER
31, 2026] AND EACH
TAXABLE YEAR
THEREAFTER
[7.49%] 4.99%
[JANUARY 1, 2027,
THROUGH DECEMBER
31, 2027 6.99%
JANUARY 1, 2028,
THROUGH DECEMBER
31, 2028 6.49%
JANUARY 1, 2029,
THROUGH DECEMBER
31, 2029 5.99%
JANUARY 1, 2030,
THROUGH DECEMBER
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31, 2030 5.49%
JANUARY 1, 2031, AND
EACH TAXABLE YEAR
THEREAFTER 4.99%]
* * *
SECTION 3. SECTION 407.7 OF THE ACT IS AMENDED TO READ:
Section 407.7. Manufacturing Innovation and Reinvestment
Deduction.--(a) In order to be eligible to receive a
manufacturing innovation and reinvestment deduction, a taxpayer
must demonstrate to the department a private capital investment
in excess of [sixty million dollars ($60,000,000)] fifty million
dollars ($50,000,000) for the creation of new or refurbished
manufacturing capacity within [three years of a designated start
date] the applicable time period specified in subsection (b).
(b) (1) A taxpayer must advise the department in advance of
the start date of any project for which the taxpayer may seek a
qualified manufacturing innovation and reinvestment deduction. A
taxpayer must attest the taxpayer's intent to meet the
eligibility criteria and provide relevant information pertinent
to the project's size and scope in a manner as determined by the
department.
(2) For a private capital investment of less than or equal
to one hundred fifty million dollars ($150,000,000), the
following shall apply:
(i) The project must be completed within three years of the
project's start date.
(ii) Within five years of [a] the project's start date, [a]
the taxpayer must complete to the department's satisfaction an
application on a form and in a manner as determined by the
department to attest that the project has been completed and the
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eligibility criteria has been satisfied.
(3) For a private capital investment greater than one
hundred fifty million one dollars ($150,000,001) and less than
two hundred fifty million dollars ($250,000,000), the following
shall apply:
(i) The project must be completed within five years of the
project's start date.
(ii) Within seven years of the project's start date, the
taxpayer must complete to the department's satisfaction an
application on a form and in a manner as determined by the
department to attest that the project has been completed and the
eligibility criteria has been satisfied.
(4) For a private capital investment greater than two
hundred fifty million one dollars ($250,000,001) and less than
three hundred fifty million dollars ($350,000,000), the
following shall apply:
(i) The project must be completed within seven years of the
project's start date.
(ii) Within nine years of the project's start date, the
taxpayer must complete to the department's satisfaction an
application on a form and in a manner as determined by the
department to attest that the project has been completed and the
eligibility criteria has been satisfied.
(5) For a private capital investment greater than three
hundred fifty million one dollars ($350,000,001) , the department
shall establish the time period from the project's start date in
which the project must be completed and the time period in which
the application as described in paragraph (4) must be completed.
(c) Upon the receipt of the taxpayer's application, the
Department of Revenue [must] shall make a finding [that] whether
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the applicant has filed all required State tax reports and
returns for all applicable tax years and paid any balance of
State tax due as determined at settlement, assessment or
determination, and the department, then in conjunction with the
Department of Revenue, shall make an eligibility or satisfaction
determination within ninety days of submission. If the
department makes a satisfaction determination, the department
and the taxpayer shall execute a satisfaction commitment letter
containing the following:
(1) The number of new jobs created and their corresponding
description.
(2) The number of new jobs created during construction of
the project.
(3) The amount of private capital investment in the creation
of new jobs.
(4) The increase in the annual taxable payroll attributable
to new manufacturing jobs.
(5) A determination of the maximum allowable deduction
against a taxpayer's qualified tax liability under this article.
(6) Any other information as the department deems
appropriate.
(d)
(1.1) If the private capital investment is in excess of
sixty million dollars ($60,000,000), but not more than one
hundred million dollars ($100,000,000), the maximum allowable
deduction shall be equal to thirty-seven and one-half per cent
of the private capital investment utilized in the creation of
new or refurbished manufacturing capacity. A taxpayer may
utilize the deduction in an amount not to exceed seven and one-
half per cent of the private capital investment utilized in the
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creation of new or refurbished manufacturing capacity in any one
year of the succeeding ten tax years immediately following the
department's satisfaction determination and the execution of a
satisfaction commitment letter, up to the maximum allowable
deduction. This paragraph shall only apply to applications made
prior to January 1, 2024.
(1.2) If [the] a taxpayer's private capital investment for a
project exceeds [one hundred million dollars ($100,000,000)]
fifty million dollars ($50,000,000), the maximum allowable
deduction shall be equal to twenty-five per cent of the private
capital investment utilized in the creation of new or
refurbished manufacturing capacity. A taxpayer may utilize the
deduction in an amount not to exceed five per cent of the
private capital investment utilized in the creation of new or
refurbished manufacturing capacity in any one year of the
succeeding ten tax years immediately following the department's
satisfaction determination and the execution of a satisfaction
commitment letter, up to the maximum allowable deduction.
(1.3) If a taxpayer executes a satisfaction commitment
letter for more than two concurrent projects with a total
private capital investment exceeding five hundred million
dollars ($500,000,000), the maximum allowable deduction for any
succeeding project shall be equal to twenty-five per cent of the
private capital investment utilized in the creation of new or
refurbished manufacturing capacity. A taxpayer may utilize the
deduction in an amount not to exceed five per cent of the
private capital investment utilized in the creation of new or
refurbished manufacturing capacity in any one year of the
succeeding twenty tax years immediately following the
department's satisfaction determination and the execution of a
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satisfaction commitment letter, up to the maximum allowable
deduction.
(3) A taxpayer cannot use the deduction to reduce [its] the
taxpayer's tax liability by more than fifty per cent of the tax
liability under this article for the taxable year. The deduction
is nontransferable and any unused portion in a tax year shall
expire at the end of the corresponding tax year.
Section 2. This 4. THE AMENDMENT OF SECTION 407.7 OF THE
act shall apply to tax years beginning after December 31, 2023.
Section 3 5. This act shall take effect immediately.
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