HB 1749 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in sales and use tax, further providing for exclusions from tax; and establishing a fueling opportunities for the revitalization, growth and efficiency of steel tax credit.

PRINTER'S NO.   2157

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1749
                                               Session of
                                                 2025

     INTRODUCED BY MADSEN, INGLIS, DAVIDSON, KUZMA, T. DAVIS, HILL-
        EVANS, GIRAL, FREEMAN, SANCHEZ, D. WILLIAMS, GUZMAN, HADDOCK
        AND NEILSON, JULY 21, 2025

     REFERRED TO COMMITTEE ON FINANCE, JULY 22, 2025


                                    AN ACT
 1   Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
 2      act relating to tax reform and State taxation by codifying
 3      and enumerating certain subjects of taxation and imposing
 4      taxes thereon; providing procedures for the payment,
 5      collection, administration and enforcement thereof; providing
 6      for tax credits in certain cases; conferring powers and
 7      imposing duties upon the Department of Revenue, certain
 8      employers, fiduciaries, individuals, persons, corporations
 9      and other entities; prescribing crimes, offenses and
10      penalties," in sales and use tax, further providing for
11      exclusions from tax; and establishing a fueling opportunities
12      for the revitalization, growth and efficiency of steel tax
13      credit.
14      The General Assembly of the Commonwealth of Pennsylvania
15   hereby enacts as follows:
16      Section 1.    Section 204 of the act of March 4, 1971 (P.L.6,
17   No.2), known as the Tax Reform Code of 1971, is amended by
18   adding a clause to read:
19      Section 204.    Exclusions from Tax.--The tax imposed by
20   section 202 shall not be imposed upon any of the following:
21      * * *
22      (77)    The sale at retail or use of Pennsylvania steel
23   products in this Commonwealth. For the purposes of this clause,
 1   the term "Pennsylvania steel products" means products rolled,
 2   formed, shaped, drawn, extruded, forged, cast, fabricated or
 3   otherwise similarly processed, or processed by a combination of
 4   two or more of such operations, from steel made in Pennsylvania
 5   by the open hearth, basic oxygen, electric furnace, Bessemer or
 6   other steel making process. The following shall apply:
 7      (i)    The term shall include cast iron products made in
 8   Pennsylvania or machinery and equipment listed in United States
 9   Department of Commerce Standard Industrial Classification 25
10   (furniture and fixtures), 35 (industrial and commercial
11   machinery and computer equipment) and 37 (transportation
12   equipment) and made of, fabricated from or containing steel
13   components made in Pennsylvania.
14      (ii)   If a product contains Pennsylvania steel and United
15   States steel or foreign steel, the product shall be considered a
16   Pennsylvania steel product under this clause only if at least
17   seventy-five per cent of the cost of the articles, materials and
18   supplies have been mined, produced or manufactured, as the case
19   may be, in Pennsylvania.
20      Section 2.   The act is amended by adding an article to read:
21                              ARTICLE XVII-G.2
22              FUELING OPPORTUNITIES FOR THE REVITALIZATION,
23                GROWTH AND EFFICIENCY OF STEEL TAX CREDIT
24   Section 1701-G.2.   Scope of article.
25      This article establishes a fueling opportunities for the
26   revitalization, growth and efficiency of steel tax credit.
27   Section 1702-G.2.   Definitions.
28      The following words and phrases when used in this article
29   shall have the meanings given to them in this section unless the
30   context clearly indicates otherwise:

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 1      "Company."    A corporation, partnership, limited liability
 2   company, limited liability partnership, business trust,
 3   affiliate, unincorporated joint venture or other business entity
 4   doing business within this Commonwealth.
 5      "Department."    The Department of Revenue of the Commonwealth.
 6      "Facility improvement."     A retrofit, upgrade or operational
 7   improvement at a facility located in this Commonwealth for the
 8   purpose of manufacturing steel at the facility, including the
 9   installation or use of advanced manufacturing technology.
10      "Pass-through entity."     Any of the following:
11          (1)     A partnership as defined in section 301(n.0).
12          (2)     A Pennsylvania S corporation as defined in section
13      301(n.1).
14          (3)     An unincorporated entity subject to section 307.21.
15      "Qualified tax liability."     The liability for taxes imposed
16   under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term
17   does not include tax withheld under section 316.1.
18      "Qualified taxpayer."     A company that satisfies all of the
19   following:
20          (1)     Purchases and uses facility improvements to
21      manufacture steel material at a facility located in this
22      Commonwealth.
23          (2)     Has made a capital investment of at least
24      $50,000,000 in facility improvements to manufacture steel
25      material at a facility located in this Commonwealth.
26          (3)     Has created at least 100 full-time equivalent jobs
27      due to the purchase and use of facility improvements to
28      manufacture steel material at a facility located in this
29      Commonwealth.
30      "Tax credit."    The fueling opportunities for the

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 1   revitalization, growth and efficiency of steel tax credit
 2   established under this article.
 3   Section 1703-G.2.           Eligibility.
 4      In order to be eligible to receive a tax credit, a company
 5   shall demonstrate:
 6            (1)     The company is a qualified taxpayer.
 7            (2)     Confirmation that the company has filed all required
 8      State tax reports and returns for all applicable taxable
 9      years and paid any balance of State tax due as determined by
10      assessment or determination by the department and not under
11      timely appeal.
12   Section 1704-G.2.           Application and approval of tax credit.
13      (a)   Determination of tax credit amount.--
14            (1)   The annual tax credit amount may be determined based
15      upon any one or more of the following:
16                  (i)    A base tax credit equal to no more than 3% of
17            the amount of capital investments in facility
18            improvements.
19                  (ii)    An additional tax credit equal to no more than
20            3% of the amount of capital investments in facility
21            improvements involving advanced manufacturing technology
22            that:
23                         (A)    enable lower-carbon steel production;
24                         (B)    increase electricity or hydrogen generation
25                  capacity; or
26                         (C)    use recycled steel as a material input.
27            (2)   A portion of the additional tax credit under
28      paragraph (1)(ii) may be allocated to workforce development
29      expenditures, including training for employees in advanced or
30      modern steel production practices, not to exceed $2,500 per

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 1    worker.
 2    (b)   Application.--
 3          (1)   A qualified taxpayer may apply to the department for
 4    a tax credit under this section.
 5          (2)   The application must be submitted to the department
 6    by March 1 for the tax credit claimed for capital investments
 7    in facility improvements by the qualified taxpayer during the
 8    prior calendar year. The application must be on the form
 9    required by the department.
10          (3)   The qualified taxpayer shall include all of the
11    following in the application:
12                (i)    A workforce reassignment plan for employees
13          displaced by technology upgrades caused by facility
14          improvements.
15                (ii)    An estimate of new jobs created due to facility
16          improvements.
17                (iii)    An estimate of existing jobs retained as a
18          result of facility improvements.
19          (4)   The department may require information necessary to
20    document the capital investments in facility improvements.
21    (c)   Review and approval.--
22          (1)   The department shall review and approve or
23    disapprove the applications by May 1.
24          (2)   Upon approval, the department shall issue a
25    certificate stating the amount of tax credit granted for
26    capital investments in facility improvements in the prior
27    calendar year.
28          (3)   In awarding tax credits, the department shall give
29    priority to qualified taxpayers that make capital investments
30    in existing facilities in this Commonwealth on or before the

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 1      effective date of this paragraph before issuing credits to
 2      qualified taxpayers that make capital investments in new or
 3      proposed facilities in this Commonwealth after the effective
 4      date of this paragraph.
 5      (d)   Availability of tax credits.--
 6            (1)   Each fiscal year, $20,000,000 in tax credits shall
 7      be made available to the department in accordance with this
 8      article.
 9            (2)   The department shall issue up to $20,000,000 in tax
10      credits in a fiscal year to the qualified taxpayers which
11      meet the qualifications to receive a tax credit under this
12      article.
13            (3)   The total aggregate amount of tax credits awarded to
14      a qualified taxpayer under this article may not exceed 30% of
15      the amount of capital investments in facility improvements.
16   Section 1705-G.2.    Use of tax credits.
17      (a)   Initial use.--Prior to sale or assignment of a tax
18   credit under section 1708-G.2, a qualified taxpayer must first
19   use a tax credit against the qualified tax liability incurred in
20   the taxable year for which the tax credit was approved.
21      (b)   Eligibility.--The tax credit may be applied against up
22   to 20% of the qualified taxpayer's qualified tax liabilities
23   incurred in the taxable year for which the tax credit was
24   approved.
25      (c)   Limit.--A qualified taxpayer that has been granted a tax
26   credit under this article shall be ineligible for any other tax
27   credit provided under this act or a tax benefit as defined in
28   section 1701-A.1.
29   Section 1706-G.2.    Employment protections.
30      (a)   Employment requirements.--A qualified taxpayer receiving

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 1   the tax credit shall certify to the department that the
 2   qualified taxpayer hires or maintains an increased or equivalent
 3   amount of employees for the five-year period after receipt of
 4   the tax credit.
 5      (b)   Training program.--A qualified taxpayer receiving the
 6   tax credit shall implement a workforce development training
 7   program within one year of receipt of the tax credit in
 8   accordance with guidelines developed by the department.
 9   Section 1707-G.2.       Carryover, carryback and refund.
10      A tax credit may not be carried back, carried forward or used
11   to obtain a refund.
12   Section 1708-G.2.       Sale or assignment.
13      (a)   Authorization.--If a qualified taxpayer holds a tax
14   credit through the end of the calendar year in which the tax
15   credit was granted, the qualified taxpayer may sell or assign a
16   tax credit, in whole or in part, provided the sale is effective
17   by the close of the following calendar year.
18      (b)   Application.--
19            (1)   To sell or assign a tax credit, a qualified taxpayer
20      must file an application for the sale or assignment of the
21      tax credit with the department. The application must be on a
22      form required by the department.
23            (2)   To approve an application, the department must
24      receive a finding from the department that the applicant has:
25                  (i)    filed all required State tax reports and returns
26            for all applicable taxable years; and
27                  (ii)   paid any balance of State tax due as determined
28            by assessment or determination by the department and not
29            under timely appeal.
30      (c)   Approval.--Upon approval by the department, a qualified

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 1   taxpayer may sell or assign, in whole or in part, a tax credit.
 2   Section 1709-G.2.    Purchasers and assignees.
 3      (a)   Time.--The purchaser or assignee under section 1708-G.2
 4   must claim the tax credit in the calendar year in which the
 5   purchase or assignment is made.
 6      (b)   Amount.--The amount of the tax credit that a purchaser
 7   or assignee under section 1708-G.2 may use against any one
 8   qualified tax liability may not exceed 50% of any of the
 9   qualified tax liabilities for the taxable year.
10      (c)   Resale and reassignment.--
11            (1)   A purchaser under section 1708-G.2 may not sell or
12      assign the purchased tax credit.
13            (2)   An assignee under section 1708-G.2 may not sell or
14      assign the assigned tax credit.
15      (d)   Notice.--The purchaser or assignee under section 1708-
16   G.2 shall notify the department of the seller or assignor of the
17   tax credit in compliance with procedures specified by the
18   department.
19   Section 17010-G.2.    Pass-through entity.
20      (a)   Election.--If a pass-through entity has an unused tax
21   credit, it may elect in writing, according to procedures
22   established by the department, to transfer all or a portion of
23   the credit to shareholders, members or partners in proportion to
24   the share of the entity's distributive income to which the
25   shareholders, members or partners are entitled.
26      (b)   Limitation.--The same unused tax credit under subsection
27   (a) may not be claimed by:
28            (1)   the pass-through entity; and
29            (2)   a shareholder, member or partner of the pass-through
30      entity.

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 1      (c)   Amount.--The amount of the tax credit that a transferee
 2   under subsection (a) may use against any one qualified tax
 3   liability may not exceed 20% of any qualified tax liabilities
 4   for the taxable year.
 5      (d)   Time.--A transferee under subsection (a) must claim the
 6   tax credit in the calendar year in which the transfer is made.
 7      (e)   Sale and assignment.--A transferee under subsection (a)
 8   may not sell or assign the tax credit.
 9   Section 1711-G.2.    Administration.
10      (a)   Audits and assessments.--The department shall:
11            (1)   Audit a qualified taxpayer claiming a tax credit to
12      ascertain the validity of the amount claimed.
13            (2)   Issue an assessment against a qualified taxpayer for
14      an improperly issued tax credit. The procedures, collection,
15      enforcement and appeals of any assessment made under this
16      section shall be governed by Article II.
17      (b)   Recapture.--
18            (1)   The department may recapture all or part of the tax
19      credit if a recipient fails to meet the job retention or
20      creation requirements under this article.
21            (2)   A recipient of the tax credit that relocates
22      operations outside of this Commonwealth within five years
23      after receiving the credit shall repay the full amount of the
24      tax credit received to the department. The department may
25      waive the repayment requirement under this paragraph if a
26      recipient of the tax credit demonstrates substantial hardship
27      or public benefit to the department.
28      (c)   Guidelines and regulations.--The department shall
29   develop written guidelines for the implementation of this
30   article. The guidelines shall be in effect until the department

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 1   promulgates regulations for the implementation of the provisions
 2   of this article.
 3   Section 1712-G.2.   Reports to General Assembly.
 4      By September 1, 2026, and September 1 of each year
 5   thereafter, the department shall submit a report on the tax
 6   credit provided by this article to the chairperson and minority
 7   chairperson of the Appropriations Committee of the Senate, the
 8   chairperson and minority chairperson of the Appropriations
 9   Committee of the House of Representatives, the chairperson and
10   minority chairperson of the Finance Committee of the Senate and
11   the chairperson and minority chairperson of the Finance
12   Committee of the House of Representatives. The report shall
13   include all of the following:
14          (1)   The names of the qualified taxpayers utilizing the
15      tax credit as of the date of the report and the amount of tax
16      credits approved for, utilized by or sold or assigned by a
17      qualified taxpayer.
18          (2)   Data on the benefits provided to this Commonwealth
19      regarding the quantity of steel material produced and used as
20      a result of the tax credit.
21   Section 1713-G.2.   Applicability.
22      The tax credit under this article shall apply to capital
23   investments in each facility improvement for a period of five
24   years from the effective date of this section.
25      Section 3.   This act shall apply as follows:
26          (1)   The addition of section 204(77) of the act shall
27      apply to sales at retail or use after December 31, 2026.
28          (2)   The addition of Article XVII-G.2 of the act shall
29      apply for tax years commencing after December 31, 2026.
30      Section 4.   This act shall take effect immediately.

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