The proposed bill amends the Tax Reform Code of 1971 by adding a new article, ARTICLE XIX-L, which establishes a small business minimum wage increase tax credit. This credit is designed to assist employers with 50 or fewer full-time equivalent employees who are affected by increases in the minimum wage as outlined in The Minimum Wage Act of 1968. Employers can claim a tax credit against their state tax liability for taxable years following a minimum wage increase, with the credit amount determined by the difference in compensation paid to employees before and after the wage increase. The credit is set at 50% for the first taxable year after the increase and 25% for the second year, expiring in the third taxable year.

Additionally, the bill outlines provisions for the carryover of unused tax credits, stating that if the credit exceeds the employer's tax liability, it can be carried over for up to three years. However, there are no provisions for carrybacks or refunds. The bill also allows pass-through entities to transfer unused credits to shareholders, members, or partners, who must claim the credit in the year of transfer. The Department of Revenue is tasked with publishing guidelines and regulations for the implementation of this new tax credit program. 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