PRIOR PRINTER'S NO. 179
PRINTER'S NO. 2438
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
219
Session of
2023
INTRODUCED BY ISAACSON, BURGOS, CIRESI, DELLOSO, FLEMING,
GUENST, HANBIDGE, HILL-EVANS, KHAN, KINSEY, MADDEN, SANCHEZ
AND SAMUELSON, MARCH 8, 2023
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, DECEMBER 13, 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 personal income tax, providing for income tax
credit for interest paid on student loans FURTHER PROVIDING
FOR DEFINITIONS AND FOR CLASSES OF INCOME.
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 a section to
read:
Section 314.1. Income Tax Credit for Interest Paid on
Student Loans.--(a) A resident taxpayer before allowance of any
credit under section 312 shall be allowed a credit for student
loan interest against the tax otherwise due under this article
for the amount of any income tax, wage tax or tax on or measured
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by gross or net earned or unearned income.
(b) To qualify for the credit, a resident taxpayer's
modified adjusted gross income must be less than seventy-five
thousand dollars ($75,000) or less than one hundred fifty-five
thousand dollars ($155,000) if filing a joint return. The credit
can reduce the amount of income subject to tax by up to two
thousand five hundred dollars ($2,500).
(c) The qualified student loan must have been taken solely
to pay educational expenses, including tuition and fees, room
and board, books, supplies and equipment and other necessary
expenses, and the loan cannot be from a related person or made
under a qualified employer plan.
(d) The tax credit provided in this section may be used
during the remaining period of the student loan.
(e) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection unless
the context clearly indicates otherwise:
"Qualified educational institution." A college, university,
vocational school or other postsecondary educational institution
eligible to participate in a student aid program administered by
the United States Department of Education.
"Qualified student loan." Indebtedness incurred by a
taxpayer to pay educational expenses, which are incurred on
behalf of the taxpayer, the taxpayer's spouse or any dependent
of the taxpayer at the time the indebtedness was incurred.
"Student loan interest." Interest paid during the year on a
qualified student loan to attend a qualified educational
institution, including both required and voluntary interest
payments.
Section 2. The addition of section 314.1 of the act
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SECTION 1. SECTION 301 OF THE ACT OF MARCH 4, 1971 (P.L.6,
NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED BY
ADDING DEFINITIONS TO READ:
SECTION 301. DEFINITIONS.--ANY REFERENCE IN THIS ARTICLE TO
THE INTERNAL REVENUE CODE OF 1986 SHALL MEAN THE INTERNAL
REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. ยง 1 ET SEQ.),
AS AMENDED TO JANUARY 1, 1997, UNLESS THE REFERENCE CONTAINS THE
PHRASE "AS AMENDED" AND REFERS TO NO OTHER DATE, IN WHICH CASE
THE REFERENCE SHALL BE TO THE INTERNAL REVENUE CODE OF 1986 AS
IT EXISTS AS OF THE TIME OF APPLICATION OF THIS ARTICLE. 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 CLEARLY INDICATES A DIFFERENT MEANING:
* * *
(O.5) "QUALIFIED STUDENT LOAN" MEANS INDEBTEDNESS INCURRED
BY A TAXPAYER TO PAY EDUCATIONAL EXPENSES, WHICH ARE:
(1) INCURRED ON BEHALF OF THE TAXPAYER, THE TAXPAYER'S
SPOUSE OR A DEPENDENT OF THE TAXPAYER AT THE TIME THE
INDEBTEDNESS WAS INCURRED; AND
(2) TAKEN SOLELY TO PAY EDUCATIONAL EXPENSES, INCLUDING
TUITION AND FEES, ROOM AND BOARD, BOOKS, SUPPLIES AND EQUIPMENT
AND OTHER NECESSARY EXPENSES.
THE TERM DOES NOT INCLUDE INDEBTEDNESS OWED BY A TAXPAYER TO A
RELATED PERSON OF THE TAXPAYER.
* * *
(T.1) "STUDENT LOAN INTEREST" MEANS INTEREST PAID DURING THE
YEAR ON A QUALIFIED STUDENT LOAN, INCLUDING REQUIRED AND
VOLUNTARY INTEREST PAYMENTS, TO ATTEND A COLLEGE, UNIVERSITY,
VOCATIONAL SCHOOL OR OTHER POSTSECONDARY EDUCATIONAL INSTITUTION
ELIGIBLE TO PARTICIPATE IN A STUDENT AID PROGRAM ADMINISTERED BY
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THE UNITED STATES DEPARTMENT OF EDUCATION.
* * *
SECTION 2. SECTION 303 OF THE ACT IS AMENDED BY ADDING A
SUBSECTION TO READ:
SECTION 303. CLASSES OF INCOME.--* * *
(A.11) THE AMOUNT OF STUDENT LOAN INTEREST PAID DURING A
TAXABLE YEAR BY A RESIDENT INDIVIDUAL SHALL BE DEDUCTIBLE FROM
TAXABLE INCOME ON THE ANNUAL PERSONAL INCOME TAX RETURN,
PROVIDED THAT THE DEDUCTION MAY NOT:
(1) EXCEED TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) PER
TAXABLE YEAR; AND
(2) RESULT IN TAXABLE INCOME BEING LESS THAN ZERO.
* * *
SECTION 3. THIS ACT shall apply to taxable years commencing
after December 31, 2023.
Section 3 4. This act shall take effect in 60 days
IMMEDIATELY.
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