Pennsylvania SB 1406: An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in tax credit and tax benefit administration, further providing for definitions; and providing for Keystone Literacy Investment Tax Credit.

Bill Text

PRINTER'S NO. 1870
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1406
Session of
2026
INTRODUCED BY PENNYCUICK, PICOZZI AND ARGALL, JULY 8, 2026
REFERRED TO FINANCE, JULY 8, 2026
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 tax credit and tax benefit administration,
further providing for definitions; and providing for Keystone
Literacy Investment Tax Credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "tax credit" in section 1701-
A.1 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, is amended by adding a paragraph to read:
Section 1701-A.1. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Tax credit." A tax credit authorized under any of the
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

following:
* * *
(14.2) Article XVIII-I.
* * *
Section 2. The act is amended by adding an article to read:
ARTICLE XVIII-I
KEYSTONE LITERACY INVESTMENT TAX CREDIT
Section 1801-I. Scope of article.
This article relates to the Keystone Literacy Investment Tax
Credit.
Section 1802-I. Legislative intent.
It is the intent of this article to fund the evidence-based
reading instruction program under Article XV-N of the act of
March 10, 1949 (P.L.30, No.14), known as the Public School Code
of 1949. Proficiency in reading is foundational to academic
achievement across all disciplines and essential to long-term
success in life and the workforce. By investing in evidence-
based structured literacy instruction, the Commonwealth ensures
that every student acquires the literacy skills necessary to
thrive, while also strengthening workforce productivity,
expanding economic opportunity and reducing long-term social
costs.
Section 1803-I. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Allocation amount." The total amount of tax credits
purchased by a qualified taxpayer.
"Capital." The amount of money that a purchaser contributes
to the program.
20260SB1406PN1870 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

"Department." The Department of Community and Economic
Development of the Commonwealth.
"Fund." The Keystone Literacy Investment Fund.
"Insurance premiums tax liability." Any liability incurred
by an insurance company under Article IX.
"Program." The Keystone Literacy Investment Program.
"Qualified taxpayer." Any of the following that has
insurance premiums tax liability and contributes capital to
purchase premiums tax credits under this article:
(1) An insurance company authorized to do business in
this Commonwealth.
(2) A holding company that has at least one insurance
company subsidiary authorized to do business in this
Commonwealth.
"Tax credit." A credit against insurance premiums tax
liability offered to or held by a qualified taxpayer under this
article.
Section 1804-I. Tax credit.
A qualified taxpayer may purchase tax credits from the
department in accordance with this article and may apply the tax
credits against the qualified taxpayer's insurance premiums tax
liability in accordance with this article.
Section 1805-I. Duties.
(a) Sale of tax credits.--The department may sell up to
$150,000,000 in tax credits to qualified taxpayers. The sale of
the tax credits shall be in accordance with section 1808-I.
(b) Time of sale.--The sale authorized under subsection (a)
shall occur by January 31, 2027.
Section 1806-I. Use of tax credits by qualified taxpayers.
(a) Use against insurance premiums tax liability.--A
20260SB1406PN1870 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

qualified taxpayer that purchases tax credits under section
1805-I may claim the credits beginning in calendar year 2029
against insurance premiums tax liability incurred for a taxable
year that begins on or after January 1, 2028.
(b) Application to department.--A qualified taxpayer seeking
to use purchased tax credits may submit an application to the
department in a manner prescribed by the department.
(c) Construction.--
(1) A qualified taxpayer may not be required to reduce
the amount of insurance premiums tax included by the taxpayer
in connection with ratemaking for any insurance contract
written in this Commonwealth beca