HB 963 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for Apprentice Education Expense Tax Credit Program and for powers of the Department of Revenue.

PRINTER'S NO.   1040

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 963
                                                  Session of
                                                    2025

     INTRODUCED BY MALAGARI, HILL-EVANS, GIRAL, PIELLI, HANBIDGE,
        CIRESI, SANCHEZ, FREEMAN, CEPEDA-FREYTIZ, WEBSTER, DEASY,
        CERRATO AND GREEN, MARCH 19, 2025

     REFERRED TO COMMITTEE ON FINANCE, MARCH 19, 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 Apprentice Education Expense Tax
11      Credit Program and for powers of the Department of Revenue.
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           APPRENTICE EDUCATION EXPENSE TAX CREDIT PROGRAM
19   Section 1701-M.    Scope of article.
20      This article establishes tax credits for educational expenses
21   of apprentices.
22   Section 1702-M.    Definitions.
 1      The following words and phrases when used in this article
 2   shall have the meanings given to them in this section unless the
 3   context clearly indicates otherwise:
 4      "Department."    The Department of Revenue of the Commonwealth.
 5      "Employer."    A Pennsylvania taxpayer who is the employer of
 6   the qualifying apprentice.
 7      "Qualified education expense."       The amount incurred on behalf
 8   of a qualifying apprentice, not to exceed $3,500, for tuition,
 9   book fees and lab fees at the school in which the apprentice is
10   enrolled during the regular school year.
11      "Qualifying apprentice."    An individual who:
12          (1)     is a resident of this Commonwealth;
13          (2)     is at least 16 years of age at the close of the
14      school year for which a credit is sought;
15          (3)     during the school year for which a credit is sought,
16      was a full-time apprentice enrolled in an apprenticeship
17      program which is registered with the United States Department
18      of Labor, Office of Apprenticeship; and
19          (4)     is employed in Pennsylvania by the taxpayer who is
20      the employer.
21      "School."    A public or nonpublic postsecondary school in
22   Pennsylvania that is:
23          (1)     an institution of higher education that provides a
24      program that leads to an industry-recognized postsecondary
25      credential or degree;
26          (2)     an entity that carries out programs registered under
27      29 U.S.C. Ch. 4C (relating to apprentice labor); or
28          (3)     a public or private provider of a program of
29      training services, which may include a joint labor-management
30      organization.

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 1      "Underserved area."     A geographic area that meets one or more
 2   of the following conditions:
 3            (1)   The area has a poverty rate of at least 20%
 4      according to the latest Federal decennial census.
 5            (2)   Seventy-five percent or more of the children in the
 6      area participate in the Federal free lunch program according
 7      to reported statistics from the State Board of Education.
 8            (3)   At least 20% of the households in the area receive
 9      assistance under the Supplemental Nutrition Assistance
10      Program.
11            (4)   The area has an average unemployment rate as
12      determined by the Department of Labor and Industry that is
13      more than 120% of the national unemployment average, as
14      determined by the United States Department of Labor, for a
15      period of at least two consecutive calendar years preceding
16      the date of the application.
17   Section 1703-M.     Apprenticeship Education Expense Tax Credit
18                  Program.
19      (a)   Establishment.--The Apprenticeship Education Expense Tax
20   Credit Program is established to certify applicants for an
21   apprenticeship tax credit.
22      (b)   Issuance of tax credit certificate.--Upon the
23   department's approval, the department shall issue a tax credit
24   certificate to an employer incurring costs on behalf of a
25   qualifying apprentice stating the amount of the tax credit to
26   which the employer is entitled. If the employer is seeking a tax
27   credit for multiple qualifying apprentices, the department may
28   issue a single tax credit certificate that encompasses the
29   aggregate total of tax credits for qualifying apprentices for a
30   single employer.

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 1         (c)   Power and duties.--The department shall have the power
 2   to:
 3               (1)   Promulgate regulations necessary for the
 4         administration of this article, including establishing forms
 5         for applications, notifications, contracts or any other
 6         agreements. The department shall accept applications at any
 7         time during the year and require that all applications be
 8         submitted in an electronic form through the department's
 9         publicly accessible Internet website.
10               (2)   Provide guidance and assistance to applicants
11         pursuant to the provisions of this section and cooperate with
12         applicants to promote, foster and support job creation within
13         this Commonwealth.
14               (3)   Enter into agreements and memoranda of understanding
15         for participation of and engage in cooperation with agencies
16         of the Federal Government, units of local government,
17         universities, research foundations or institutions, regional
18         economic development corporations or other organizations for
19         the purposes of this article.
20               (4)   Gather information and conduct inquiries, including,
21         without limitation, gathering information with respect to
22         applicants for the purpose of making any necessary
23         designations or certifications or to gather information in
24         furtherance of the purposes of this article.
25               (5)   Establish, negotiate and effectuate any term,
26         agreement or other document with any individual necessary to
27         accomplish the purposes of this article and consent, subject
28         to the provisions of an agreement with another party, to the
29         modification or restructuring of any agreement to which the
30         department is a party.

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 1        (6)   Provide for sufficient personnel to permit
 2    administration, staffing, operation and related support
 3    required to adequately discharge the department's duties
 4    under this section from funds made available through charges
 5    to applicants or from funds as may be appropriated by the
 6    General Assembly for the administration of this article.
 7        (7)   Require applicants, upon written request, to issue
 8    any necessary authorization to the appropriate Federal, State
 9    or local authority or any other person for the release to the
10    department of information requested by the department,
11    including, but not limited to, financial reports, returns or
12    records relating to the applicant or to the amount of credit
13    allowable under this section.
14        (8)   Require that an applicant shall, at all times, keep
15    proper books of record and account in accordance with
16    generally accepted accounting principles consistently
17    applied, with the books, records or papers related to the
18    agreement, in the custody or control of the applicant open
19    for reasonable department inspection and audits, including,
20    without limitation, the making of copies of the books,
21    records or papers.
22        (9)   Take whatever actions that are necessary to protect
23    the Commonwealth's interest in the event of bankruptcy,
24    default, foreclosure or noncompliance with the terms and
25    conditions of financial assistance or participation required
26    under this section or any agreement entered into under this
27    section, including the power to sell, dispose of, lease or
28    rent, upon terms and conditions determined by the department
29    to be appropriate, real or personal property that the
30    department may recover as a result of those actions.

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 1   Section 1704-M.    Tax credit.
 2      (a)   Tax credit.--For taxable years beginning on or after
 3   January 1, 2026, and beginning on or before January 1, 2030, the
 4   employer of one or more qualifying apprentices shall be allowed
 5   a credit against the tax imposed under section 302(a) and (b)
 6   for qualified education expenses incurred on behalf of a
 7   qualifying apprentice. The credit shall be equal to 100% of the
 8   qualified education expenses, but in no event may the total
 9   credit amount awarded to a single taxpayer in a single taxable
10   year exceed $3,500 per qualifying apprentice. A taxpayer shall
11   be entitled to an additional $1,500 credit against the tax
12   imposed by section 302(a) and (b) if:
13            (1)   the qualifying apprentice resides in an underserved
14      area during the school year for which a credit is sought by
15      an employer; or
16            (2)   the employer's principal place of business is
17      located in an underserved area.
18      (b)   Limitation on tax credit amount.--In no event shall a
19   tax credit under this section reduce the taxpayer's liability
20   under this act to less than zero.
21      (c)   Limited liability companies.--For partners, shareholders
22   of Subchapter S corporations and owners of limited liability
23   companies, if the liability company is treated as a partnership
24   for purposes of Federal and State income taxation, a credit to
25   be determined by the department shall be allowed in accordance
26   with the determination of income and distributive share of
27   income under 26 U.S.C. §§ 702 (relating to income and credits of
28   partner) and 704 (relating to partner's distributive share).
29      (d)   Rules.--The department shall adopt rules to administer
30   this section. The aggregate amount of the tax credits that may

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 1   be claimed under this section shall be limited to $5,000,000 per
 2   calendar year. If applications for a greater amount are
 3   received, credits shall be approved on a first-come, first-
 4   served basis, based on the date on which each properly completed
 5   application for a certificate of eligibility is received by the
 6   department. If more than one certificate is received on the same
 7   day, the credits will be awarded based on the time of submission
 8   for that particular day.
 9      (e)   Transfers prohibited.--An employer may not sell or
10   otherwise transfer a credit awarded under this section to
11   another person or taxpayer.
12      (f)   Employer information.--An employer shall provide
13   information as the department may require, including, but not
14   limited to, the:
15            (1)   name, age and taxpayer identification number of each
16      qualifying apprentice employed by the taxpayer during the
17      taxable year;
18            (2)   amount of qualified education expenses incurred with
19      respect to each qualifying apprentice; and
20            (3)   name of the school at which the qualifying
21      apprentice is enrolled and the qualified education expenses
22      are incurred.
23   Section 1705-M.    Reporting.
24      On or before July 1 of each year, the department shall report
25   to the Governor and the General Assembly on the tax credit
26   certificates awarded under this section for the prior calendar
27   year. The report shall include:
28            (1)   the name of each employer awarded or allocated a
29      credit;
30            (2)   the number of qualifying apprentices for whom the

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 1    employer has incurred qualified education expenses;
 2        (3)   the North American Industry Classification System
 3    code applicable to each employer awarded or allocated a
 4    credit;
 5        (4)   the amount of the credit awarded to each employer;
 6        (5)   the total number of employers awarded a credit;
 7        (6)   the total number of qualifying apprentices for whom
 8    employers receiving credits under this section incurred
 9    qualified education expenses; and
10        (7)   the average cost to the employer of all
11    apprenticeships receiving credits under this article.
12    Section 2.    This act shall take effect in 60 days.




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