PRIOR PRINTER'S NOS. 2596, 2757
PRINTER'S NO. 3077
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1958
Session of
2024
INTRODUCED BY HANBIDGE, CEPHAS, SAMUELSON, RABB, SCHLOSSBERG,
MERSKI, MADSEN, KHAN, PARKER, DONAHUE, T. DAVIS, DELLOSO,
GUENST, SANCHEZ, HOWARD, FREEMAN, HILL-EVANS, CERRATO,
CONKLIN, CIRESI, FLEMING, DALEY, SHUSTERMAN, BOYD, OTTEN,
FIEDLER, GREEN AND WEBSTER, FEBRUARY 20, 2024
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
MAY 8, 2024
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 employer child care contribution
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-J
EMPLOYER CHILD CARE CONTRIBUTION TAX CREDIT
Section 1901-J. Scope of article.
This article establishes the Employer Child Care Contribution
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Tax Credit.
Section 1902-J. 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:
"Aggregate contribution." The aggregate contribution that a
qualified taxpayer makes to all employees during the taxable
year for which the qualified taxpayer seeks the employer child
care contribution tax credit established under this article,
provided that only the first $500 in contributions per employee
shall count toward the aggregate contribution.
"Child-care provider." Includes:
(1) A child-care center as defined under 55 Pa. Code §
3270.4 (relating to definitions).
(2) A group child-care home as defined under 55 Pa. Code
§ 3280.4 (relating to definitions).
(3) A family child-care home as defined under 55 Pa.
Code § 3290.4 (relating to definitions).
"Contribution." A payment made to a child-care provider by
an employer to subsidize an employee's eligible child-care
costs.
"Department." The Department of Revenue of the Commonwealth.
"Eligible child-care costs." Costs incurred by an employee
for services rendered by a child-care provider that are incurred
to enable the employee to be gainfully employed by a qualified
taxpayer.
"Employee." An individual employed by a qualified taxpayer.
The term shall not include:
(1) An officer of an entity subject to tax under Article
IV, VI, VIII or XV IV, VIII, XV OR XX .
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(2) An officer of an insurance company subject to tax
under Article IX.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified tax liability." Any of the taxes due under
Article III, IV, VII, VIII, IX, XI, XV or XX or a tax under
Article XVI of the act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921. The term shall not include
any tax withheld by an employer from an employee under Article
III.
"Qualified taxpayer." An individual, partnership,
association, corporation, governmental body or unit or agency or
other entity that:
(1) is subject to a tax imposed under Article III, IV,
VI, VII, VIII, IX, XI or XV III, IV, VII, VIII, IX, XI, XV OR
XX ; and
(2) is required under the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.) to withhold
Federal income tax from wages paid to an employee.
Section 1903-J. Employer child care contribution tax credit.
(a) General rule.--For taxable years beginning after
December 31, 2024, a qualified taxpayer may claim the employer
child care contribution tax credit for a contribution made
during the taxable year toward an employee's eligible child-care
costs and may apply the tax credit against its qualified tax
liability.
(b) Application.--A qualified taxpayer applying to claim an
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employer child care contribution tax credit must complete and
submit to the department a child care contribution tax credit
application on a form and in a manner as determined by the
department. The form shall require the qualified taxpayer to
provide the following:
(1) The names, addresses and Social Security numbers of
all employees to which the qualified taxpayer made a
contribution during the taxable year.
(2) The names, addresses and employer identification
numbers of the child-care providers that provided child-care
services to each participating employee.
(3) The amount contributed to each participating
employee.
(4) The aggregate contribution.
(c) Amount of tax credit.--The amount of the tax credit
under subsection (a) shall be equal to 30% of the aggregate
contribution made to employees during the tax year.
(d) Limitation on use of tax credit.--A qualified taxpayer
may not apply the credit to more than one type of tax under this
article.
Section 1904-J. Carryover, carryback, refund and assignment of
credit.
(a) Carryover, carryback and refund.--A qualified taxpayer
is not entitled to carry forward, carry back or obtain a refund
of all or a portion of an unused tax credit granted to the
qualified taxpayer under this article.
(b) Sale or assignment of tax credit.--A qualified taxpayer
may not sell or assign a tax credit granted to the qualified
taxpayer under this article.
Section 1905-J. Pass-through entity.
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(a) Election.--If the qualified taxpayer is a pass-through
entity, the qualified taxpayer 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 qualified taxpayer's distributive
income to which the shareholders, members or partners are
entitled or in any other manner designated by the qualified
taxpayer in accordance with its governance documents and without
regard to how distributive income, losses or credits are
allocated for other tax purposes.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Time.--A shareholder, member or partner of a pass-
through entity under subsection (a) may only use a tax credit
during a taxable year for which use of the credit is authorized.
The shareholder, member or partner of the pass-through entity
may not carry forward, carry back, obtain a refund of or sell or
assign the tax credit.
Section 1906-J. Exclusion from classes of income.
Notwithstanding any other provision of law, the first $5,000
in contributions made under this article to an employee's
eligible child-care costs during the taxable year may not be
included in any of the classes of income enumerated under
section 303.
Section 1907-J. Nondiscrimination in contributions.
(a) Employees.--An employee who has incurred eligible child-
care costs shall have equal opportunity to receive a
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contribution from the employer.
(b) Duty of employers.--If an employer chooses to make
contributions to a child-care provider for the purposes of
claiming the tax credit, the employer shall make equal
contributions during the tax year to any employee that has
eligible child-care costs.
Section 1908-J. Regulations.
(a) Promulgation.--The department shall promulgate
regulations to implement the provisions of this article.
(b) Guidelines.--The department shall develop written
guidelines for the implementation of this article. The
guidelines shall be in effect until the department promulgates
regulations for the implementation of the provisions of this
article.
SECTION 1909-J. TAX COMPLIANCE.
THE PROVISIONS OF ARTICLE XVII-A.1 APPLY TO THE APPLICATION
OF THIS ARTICLE.
Section 1909-J 1910-J . Applicability.
The provisions of this article shall apply to taxable years
beginning after December 31, 2024.
Section 2. This act shall take effect in 60 days
IMMEDIATELY.
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