Regular Session 2023-2024 House Bill 2565 P.N. 3616

PRINTER'S NO. 3616

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2565

Session of

2024

INTRODUCED BY SAMUELSON, McNEILL, SCHLOSSBERG, PIELLI, WEBSTER,

KHAN, HILL-EVANS AND SANCHEZ, SEPTEMBER 17, 2024

REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 17, 2024

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," in Pennsylvania Economic Development for a

Growing Economy (PA EDGE) tax credits relating to

semiconductor manufacturing and biomedical manufacturing and

research, further providing for definitions, for eligibility,

for application and approval of credits and for sale or

assignment.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definitions of "project facility," "qualified

taxpayer" and "semiconductor manufacturing" in section 1771-L of

the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

Code of 1971, are amended and the section is amended by adding a

definition to read:

Section 1771-L. Definitions.

The following words and phrases when used in this subarticle

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Early-stage semiconductor business." A business with less

than $10,000,000 in revenue in the areas of research or design

of semiconductor materials, semiconductor devices or

semiconductor packaging and testing.

* * *

"Project facility." A facility located in this Commonwealth

which is owned and operated by [the] a qualified taxpayer and

where semiconductor manufacturing, biomedical manufacturing or

biomedical research is conducted by [the] a qualified taxpayer

at the project facility.

"Qualified taxpayer." [A company that satisfies all of the

following:

(1) Conducts semiconductor manufacturing, biomedical

manufacturing or biomedical research in this Commonwealth at

a project facility in this Commonwealth that has been placed

in service on or after the effective date of this section.

(2) Has made a capital investment of at least

$200,000,000 in order to construct the project facility and

place the project facility into service in this Commonwealth.

(3) Has created a minimum aggregate total of 800

permanent jobs.

(4) Has made good faith efforts to recruit and employ,

and to encourage any contractors or subcontractors to recruit

and employ, workers from the local labor market for

employment during the construction of the project facility.

(5) Has demonstrated that the new jobs created at the

project facility or for work covered by Subarticle F are paid

20240HB2565PN3616 - 2 -

at least the prevailing minimum wage and benefit rates for

each craft or classification as determined by the Department

of Labor and Industry.

(6) The construction work to place a project facility

into service shall be performed subject to the act of March

3, 1978 (P.L.6, No.3), known as the Steel Products

Procurement Act.] A company that either:

(1) is an early-stage semiconductor business; or

(2) satisfies all of the following:

(i) Conducts semiconductor manufacturing, biomedical

manufacturing or biomedical research in this Commonwealth

at a project facility in this Commonwealth that has been

placed in service on or after the effective date of this

definition.

(ii) Has made a capital investment of at least

$20,000,000 in order to construct the project facility

and place the project facility into service in this

Commonwealth.

(iii) Has created or retained a minimum aggregate

total of 100 permanent jobs.

(iv) Has made good faith efforts to recruit and

employ, and to encourage any contractor or subcontractor

to recruit and employ, workers from the local labor

market for employment during the construction of the

project facility.

(v) Has demonstrated that the new jobs created at

the project facility or for work covered by Subarticle F

are paid at least the prevailing minimum wage and benefit

rates for each craft or classification as determined by

the Department of Labor and Industry.

20240HB2565PN3616 - 3 -

(vi) The construction work to place a project

facility into service is subject to the act of March 3,

1978 (P.L.6, No.3), known as the Steel Products

Procurement Act.

"Semiconductor manufacturing." [The manufacture of

components or the creation of advanced processes or technology

within the semiconductor manufacturing and related equipment and

material supplier sector.] As follows:

(1) Any of the following activities:

(i) the manufacturing of components;

(ii) the creation of advanced processes or

technology; or

(iii) advanced testing and packaging of components,

in each case within the semiconductor manufacturing and

related equipment and material supplier.

(2) The term includes research or design of

semiconductor materials, semiconductor devices or

semiconductor packaging and testing.

Section 2. Sections 1772-L, 1773-L and 1776-L(a) of the act

are amended to read:

Section 1772-L. Eligibility.

In order to be eligible to receive a tax credit, a company

shall demonstrate the following:

(1) The company meets the requirements of a qualified

taxpayer.

(2) Confirmation that the company has filed all required

State tax reports and returns for all applicable taxable

years and paid any balance of State tax due as determined by

assessment or determination by the department and not under

timely appeal.

20240HB2565PN3616 - 4 -

(3) If the applicant is an early-stage semiconductor

business, the applicant must have at least $3,000,000 in

research and development investment during the previous year.

Section 1773-L. Application and approval of tax credit.

(a) Determination of tax credit amount.--The annual tax

credit amount may be determined based upon any one or more of

the following:

(1) No more than 2.5% of the capital investment.

(2) No more than 100% of tax withheld from employees and

paid under Article III or $20,000, whichever is less, for

each created or retained permanent job at the project

facility.

(b) Application.--

(1) A qualified taxpayer may apply to the department for

a tax credit under this section.

(2) The application must be submitted to the department

by March 1 for the tax credit claimed for semiconductor

manufacturing, biomedical manufacturing or biomedical

research conducted by the qualified taxpayer at [the] a

project facility during the prior calendar year.

(3) The application must be on the form required by the

department which shall include the following:

(i) information required by the department to

document the semiconductor manufacturing, biomedical

manufacturing or biomedical research conducted at [the] a

project facility;

(ii) information required by the department to

verify that the applicant is a qualified taxpayer; and

(iii) any other information as the department deems

appropriate.

20240HB2565PN3616 - 5 -

(1) The department shall review the applications and

shall issue an approval or disapproval by May 1.

(2) Upon approval, the department shall issue a

certificate stating the amount of the tax credit granted for

semiconductor manufacturing, biomedical manufacturing or

biomedical research conducted at [the] a project facility in

the prior calendar year.

(d) Availability of tax credits.--

(1) Each fiscal year, $20,000,000 in tax credits shall

be made available to the department in accordance with this

subarticle.

(2) The department shall issue [up to $10,000,000] a

minimum of $1,000,000 in a fiscal year to [the qualified

taxpayer] qualified taxpayers engaged in semiconductor

manufacturing [which first meets] that first meet the

qualifications to receive a tax credit under this subarticle.

The department may not issue more than $8,000,000 in

aggregate tax credits in a year under this paragraph.

(3) The department shall issue [up to $10,000,000] a

minimum of $1,000,000 in a fiscal year to [the qualified

taxpayer] qualified taxpayers engaged in biomedical

manufacturing or biomedical research [which first meets] that

first meet the qualifications to receive a tax credit under

this subarticle.

(3.1) The department shall issue a minimum of $100,000

in a fiscal year to early-stage semiconductor businesses that

first meet the qualifications to receive a tax credit under

this subarticle. An early-stage semiconductor business may

not receive more than $1,000,000 in any fiscal year and the

20240HB2565PN3616 - 6 -

award may be for up to five years. The department may not

issue more than $2,000,000 in aggregate tax credits in a year

under this paragraph.

(4) An amount under paragraph (1) which remains

unallocated under paragraph (2) or (3) after the issuance of

credits under paragraph (3.1) shall be issued to the

qualified taxpayer which next meets the qualifications to

receive a tax credit under this subarticle.

(5) The total aggregate amount of tax credits awarded to

a qualified taxpayer under this subarticle may not exceed 25%

of the capital investment made to construct a project

facility.

Section 1776-L. Sale or assignment.

(a) Authorization.--If [the] a qualified taxpayer holds a

tax credit through the end of the calendar year in which the tax

credit was granted, the qualified taxpayer may sell or assign a

tax credit, in whole or in part, provided the sale is effective

by the close of the following calendar year.

* * *

Section 3. This act shall take effect in 60 days.

20240HB2565PN3616 - 7 -