The proposed bill amends the Tax Reform Code of 1971 by introducing a new article, ARTICLE XIX-L, which establishes a small business minimum wage increase tax credit. This tax credit is available to employers with 50 or fewer full-time equivalent employees and is designed to assist them in offsetting the costs associated with increases to the minimum wage. The credit can be claimed for taxable years following a minimum wage increase and is calculated based on the difference in compensation paid to employees who were previously earning below the new minimum wage. The credit amounts to 50% of the increased compensation in the first taxable year after the wage increase and 25% in the second taxable year, expiring in the third taxable year.

Additionally, the bill outlines provisions for the carryover of unused tax credits, stating that any excess credit can be carried over for up to three years but cannot be refunded or carried back. It also allows pass-through entities to transfer unused credits to their shareholders, members, or partners. The Department of Revenue is tasked with publishing guidelines and regulations for the implementation of this new tax credit. The act is set to take effect 60 days after its passage.

Statutes/Laws affected:
Printer's No. 952 (Jun 18, 2025): P.L.6, No.2