1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," further providing for limitations.

11The General Assembly of the Commonwealth of Pennsylvania
12hereby enacts as follows:

13Section 1. Section 1706-F(a) of the act of March 4, 1971
14(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
15to read:

16Section 1706-F. Limitations.

17(a) Amount.--

18(1) The total aggregate amount of all tax credits
19approved shall not exceed [$100,000,000] $125,000,000 in a
20fiscal year. No less than [$60,000,000] $75,000,000 of the
21total aggregate amount shall be used to provide tax credits

1for contributions from business firms to scholarship
2organizations. No less than [$30,000,000] $37,500,000 of the
3total aggregate amount shall be used to provide tax credits
4for contributions from business firms to educational
5improvement organizations.

6(2) The following apply to specific fiscal years:

7(i) For fiscal years 2004-2005, 2005-2006 and 2006-
82007, the total aggregate amount of all tax credits
9approved for contributions from business firms to pre-
10kindergarten scholarship programs shall not exceed
11$5,000,000 in a fiscal year.

12(ii) For fiscal years 2007-2008, 2008-2009, 2009-
132010, 2010-2011 and 2011-2012, the total aggregate amount
14of all tax credits approved for contributions from
15business firms to pre-kindergarten scholarship programs
16shall not exceed $8,000,000 in a fiscal year.

17(iii) For fiscal year 2012-2013 [and each fiscal
18year thereafter], the total aggregate amount of all tax
19credits approved for contributions from business firms to
20pre-kindergarten scholarship programs shall not exceed
21$10,000,000 in a fiscal year.

22(iv) For fiscal year 2013-2014 and each fiscal year
23thereafter, the total aggregate amount of all tax credits
24approved for contributions from business firms to pre-
25kindergarten scholarship programs shall not exceed
26$12,500,000 in a fiscal year.

27(b) Activities.--No tax credit shall be approved for
28activities that are a part of a business firm's normal course of
29business.

30(c) Tax liability.--

1(1) Except as provided in paragraph (2), a tax credit
2granted for any one taxable year may not exceed the tax
3liability of a business firm.

4(2) In the case of a credit granted to a pass-through
5entity which elects to transfer the credit according to
6section 1705-F(e), a tax credit granted for any one taxable
7year and transferred to a shareholder, member or partner may
8not exceed the tax liability of the shareholder, member or
9partner.

10(d) Use.--A tax credit not used by the applicant in the
11taxable year the contribution was made or in the year designated
12by the shareholder, member or partner to whom the credit was
13transferred under section 1705-F(e) may not be carried forward
14or carried back and is not refundable or transferable.

15(e) Nontaxable income.--A scholarship received by an
16eligible student or eligible pre-kindergarten student shall not
17be considered to be taxable income for the purposes of Article
18III.

19Section 2. This act shall take effect in 60 days.