HB 775 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for phoenix employee and returnship tax credits; and imposing penalties.

PRINTER'S NO.   797

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 775
                                                  Session of
                                                    2025

     INTRODUCED BY HOWARD, GIRAL, KENYATTA, SANCHEZ, HILL-EVANS,
        SCHLOSSBERG AND GREEN, MARCH 3, 2025

     REFERRED TO COMMITTEE ON FINANCE, MARCH 3, 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," providing for phoenix employee and returnship tax
11      credits; and imposing penalties.
12      The General Assembly of the Commonwealth of Pennsylvania
13   hereby enacts as follows:
14      Section 1.     The act of March 4, 1971 (P.L.6, No.2), known as
15   the Tax Reform Code of 1971, is amended by adding an article to
16   read:
17                               ARTICLE XVII-M
18             PHOENIX EMPLOYEE AND RETURNSHIP TAX CREDITS
19   Section 1701-M.    Definitions.
20      The following words and phrases when used in this article
21   shall have the meanings given to them in this section unless the
22   context clearly indicates otherwise:
 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 in this Commonwealth.
 5      "Department."     The Department of Revenue of the Commonwealth.
 6      "Educational program."     A program offered by a secondary
 7   school or institution of higher education. The term does not
 8   include trainings or classes taken to maintain an occupational
 9   licensure or certification.
10      "Occupation of high demand."        An occupation that has a
11   shortage of qualified individuals to fill working positions as
12   determined by the department in consultation with the Department
13   of Labor and Industry.
14      "Phoenix employee."     An employee or prospective employee who
15   has not been enrolled in an educational program within the last
16   three years and meets one of the following:
17             (1)   has been out of the workforce for two years; or
18             (2)   has been hired into a position that would increase
19      the employee's earnings by at least 50% over the employee's
20      previous company.
21      "Phoenix employee tax credit."          A phoenix employee tax credit
22   issued under section 1703-M.
23      "Returnship."     A paid internship that reintroduces a phoenix
24   employee into the workforce or an industry, with the intent of
25   the company to hire the phoenix employee into a permanent,
26   substantially similar position.
27      "Returnship tax credit."        A tax credit issued under section
28   1704-M.
29   Section 1702-M.     Eligibility.
30      To be eligible to receive a phoenix employee tax credit or

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 1   returnship tax credit under this article for occupations of high
 2   demand under this article, a company must demonstrate to the
 3   department:
 4            (1)   The ability to hire or create jobs for phoenix
 5      employees.
 6            (2)   The ability to provide applicable training and
 7      resources for phoenix employees who are reentering the
 8      workforce.
 9            (3)   A signed statement stating the intent to retain a
10      phoenix employee for at least three years.
11            (4)   A signed statement stating the intent to maintain
12      operations in this Commonwealth for a period of five years
13      from the date the company submits a phoenix employee tax
14      credit or returnship tax credit certificate to the
15      department.
16   Section 1703-M.    Phoenix employee tax credit.
17      (a)   Maximum amount.--A company may claim a phoenix employee
18   tax credit equal to two times the percentage of the State
19   personal income tax, prior to deductions, imposed on a phoenix
20   employee within the company.
21      (b)   Evidence of phoenix employee.--The company shall submit
22   the following evidence that the employee meets qualifications of
23   a phoenix employee:
24            (1)   Evidence of a phoenix employee's salary from
25      previous employment, if applicable.
26            (2)   Evidence of a phoenix employee's previous enrollment
27      in an educational program, including photographic or written
28      evidence of a degree or diploma, photographic or written
29      evidence of enrollment in an educational program or other
30      form of evidence deemed acceptable by the department.

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 1            (3)   Evidence that a job was created to hire a phoenix
 2      employee, if applicable.
 3      (c)   Applicable taxes.--A company may apply the phoenix
 4   employee tax credit to 100% of the company's State corporate net
 5   income tax, capital stock and franchise tax or the capital stock
 6   and franchise tax of a shareholder of the company if the company
 7   is a Pennsylvania S corporation, gross premiums tax, gross
 8   receipts tax, bank and trust company shares tax, mutual thrift
 9   institution tax, title insurance company shares tax, personal
10   income tax or the personal income tax of shareholders of a
11   Pennsylvania S corporation or any combination thereof.
12      (d)   Phoenix employee tax credit term.--A company may claim a
13   phoenix employee tax credit for each new phoenix employee hired
14   or job created for three consecutive years after the phoenix
15   employee's date of hire, provided that the phoenix employee is
16   still employed by the company.
17      (e)   Limitation.--A company may not receive more than
18   $150,000 in the first fiscal year in which phoenix employee tax
19   credits are available, $300,000 in the second fiscal year and
20   $450,000 in subsequent fiscal years in phoenix employee tax
21   credits. This amount shall be adjusted to reflect any upward
22   changes in the Consumer Price Index for All Urban Consumers
23   (CPI-U) for the Pennsylvania, New Jersey, Delaware and Maryland
24   area.
25      (f)   Availability of phoenix employee tax credit.--
26            (1)   During the first fiscal year in which phoenix
27      employee tax credits are available, $15,000,000 in phoenix
28      employee tax credits shall be made available to the
29      department and may be awarded by the department under this
30      section.

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 1            (2)   In the second fiscal year of the phoenix employee
 2      tax credit program, a minimum of $30,000,000 in phoenix
 3      employee tax credits shall be made available to the
 4      department and may be awarded by the department under this
 5      section. This amount shall be adjusted to reflect any upward
 6      changes in the Consumer Price Index for All Urban Consumers
 7      (CPI-U) for the Pennsylvania, New Jersey, Delaware and
 8      Maryland area.
 9            (3)   In the third and subsequent fiscal years of the
10      phoenix employee tax credit program, a minimum of $45,000,000
11      in phoenix employee tax credits shall be made available to
12      the department and may be awarded by the department under
13      this section. This amount shall be adjusted to reflect any
14      upward changes in the Consumer Price Index for All Urban
15      Consumers (CPI-U) for the Pennsylvania, New Jersey, Delaware
16      and Maryland area.
17   Section 1704-M.    Returnship tax credit.
18      (a)   Duty of department.--The department shall establish
19   standards for returnships that qualify for a returnship tax
20   credit under this section.
21      (b)   Maximum amount of returnship tax credit.--A company may
22   claim a returnship tax credit of $1,000 for each returnship
23   completed by an employee in a tax year. This amount shall be
24   adjusted to reflect any upward changes in the Consumer Price
25   Index for All Urban Consumers (CPI-U) for the Pennsylvania, New
26   Jersey, Delaware and Maryland area.
27      (c)   Limitation.--A company may not receive more than
28   $100,000 in returnship tax credits in a year. This amount shall
29   be adjusted to reflect any upward changes in the Consumer Price
30   Index for All Urban Consumers (CPI-U) for the Pennsylvania, New

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 1   Jersey, Delaware and Maryland area.
 2      (d)   Evidence of returnship.--To receive a tax credit under
 3   this section, a company must submit the following evidence of a
 4   returnship an employee completes to the department:
 5            (1)   Salary of the returnship.
 6            (2)   Certification of completion of the returnship.
 7            (3)   Details of a job offer the employee was offered
 8      after the completion of the returnship.
 9            (4)   Other evidence the department requires.
10      (e)   Applicable taxes.--A company may apply a returnship tax
11   credit to 100% of the company's State corporate net income tax,
12   capital stock and franchise tax or the capital stock and
13   franchise tax of a shareholder of the company if the company is
14   a Pennsylvania S corporation, gross premiums tax, gross receipts
15   tax, bank and trust company shares tax, mutual thrift
16   institution tax, title insurance company shares tax, personal
17   income tax or the personal income tax of shareholders of a
18   Pennsylvania S corporation or any combination thereof.
19      (f)   Availability of returnship tax credit.--Each fiscal
20   year, $10,000,000 in returnship tax credits shall be made
21   available to the department and may be awarded by the department
22   under this section. In each subsequent year, this amount shall
23   be adjusted to reflect any upward changes in the Consumer Price
24   Index for All Urban Consumers (CPI-U) for the Pennsylvania, New
25   Jersey, Delaware and Maryland area.
26   Section 1705-M.     Phoenix employee tax credit for occupations of
27                  high demand.
28      (a)   Occupations of high demand list.--The department shall
29   consult with the Department of Labor and Industry and publish on
30   the department's publicly accessible Internet website a list of

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 1   occupations of high demand by January 1 of each year.
 2      (b)   Credit amount.--The amount of a phoenix employee tax
 3   credit for occupations of high demand shall be $1,000 per year
 4   and contingent upon the phoenix employee's continued employment
 5   in the occupation of high demand and employment with the company
 6   that is receiving a phoenix employee tax credit for occupations
 7   of high demand under this section. This amount shall be adjusted
 8   to reflect any upward changes in the Consumer Price Index for
 9   All Urban Consumers (CPI-U) for the Pennsylvania, New Jersey,
10   Delaware and Maryland area.
11      (c)   Phoenix employee tax credit.--A phoenix employee may
12   apply the phoenix employee tax credit for occupations of high
13   demand to the phoenix employee's personal income taxes.
14      (d)   Length of phoenix employee tax credit.--A phoenix
15   employee may be eligible for the phoenix employee tax credit for
16   occupations of high demand for a period of three consecutive
17   years after the phoenix employee's date of hire.
18      (e)   Availability of phoenix employee tax credit for
19   occupations of high demand.--
20            (1)   During the first fiscal year of the phoenix employee
21      tax credit for occupations of high demand program,
22      $10,000,000 in phoenix employee tax credits for occupations
23      of high demand shall be made available to the department and
24      may be awarded by the department under this section.
25            (2)   In the second fiscal year of the phoenix employee
26      tax credit for occupations of high demand program, a minimum
27      of $20,000,000 in phoenix employee tax credits for
28      occupations of high demand shall be made available to the
29      department and may be awarded by the department under this
30      section. This amount shall be adjusted to reflect any upward

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 1      changes in the Consumer Price Index for All Urban Consumers
 2      (CPI-U) for the Pennsylvania, New Jersey, Delaware and
 3      Maryland area.
 4            (3)   In the third and subsequent fiscal years of the
 5      phoenix employee tax credit for occupations of high demand
 6      program, a minimum of $30,000,000 in phoenix employee tax
 7      credits for occupations of high demand shall be made
 8      available to the department and may be awarded by the
 9      department under this section. If a phoenix employee is
10      terminated without cause, the employee is still eligible for
11      a phoenix employee tax credit under this section despite the
12      employee's termination. This amount shall be adjusted to
13      reflect any upward changes in the Consumer Price Index for
14      All Urban Consumers (CPI-U) for the Pennsylvania, New Jersey,
15      Delaware and Maryland area.
16   Section 1706-M.    Fair payment of phoenix employees.
17      No company shall pay a phoenix employee, either in salary or
18   benefits, less than other employees of the same position and
19   years of experience, including any prior experience in a similar
20   job. The department may take complaints from employees regarding
21   this article and shall investigate any credible complaint.
22   Section 1707-M.    Severing of employment.
23      (a)   Termination.--If a phoenix employee is terminated with
24   cause, the company shall provide evidence to the department of
25   the termination and if the termination was merited, the
26   department shall provide the phoenix employee tax credit for
27   that year. If the termination is found to be without cause and
28   not merited, the department may not award the phoenix employee
29   tax credit to the company.
30      (b)   Separation.--If a phoenix employee voluntarily separates

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 1   from a company, the company shall receive the phoenix employee
 2   tax credit for that year.
 3   Section 1708-M.    Penalties.
 4      (a)     Failure to maintain operations.--A company that receives
 5   a phoenix employee tax credit or returnship tax credit and fails
 6   to substantially maintain existing operations or operations
 7   related to the phoenix employee tax credit or returnship tax
 8   credit for a period of five years from the date the company
 9   first receives the phoenix employee tax credit or returnship tax
10   credit shall be required to refund to the Commonwealth the total
11   amount of phoenix employee tax credit or returnship tax credit
12   granted.
13      (b)     Fraud.--It is a felony of the third degree if a company
14   or the company's representative, employee, agent or phoenix
15   employee knowingly submits false documentation to the department
16   or commits fraud to obtain benefits under this article.
17      Section 2.     This act shall take effect in 60 days.




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