Pennsylvania SB 1389: An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for Small Business Health Care Premiums Contribution Tax Credit.

Bill Text

PRINTER'S NO. 1849
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1389
Session of
2026
INTRODUCED BY PISCIOTTANO, FONTANA, HAYWOOD, COSTA, MUTH,
COLLETT, SCHWANK, MALONE AND MILLER, JUNE 26, 2026
REFERRED TO FINANCE, JUNE 26, 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," providing for Small Business Health Care Premiums
Contribution Tax Credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XIX-L
SMALL BUSINESS HEALTH CARE PREMIUMS
CONTRIBUTION TAX CREDIT
Section 1901-L. Scope of article.
This article establishes the Small Business Health Care
Premiums Contribution Tax Credit.
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Section 1902-L. 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:
"Aggregate contribution." The total of the first $1,000 of
the contribution payment per employee during the taxable year.
The term shall not include any contribution payments toward an
individual coverage health reimbursement arrangement that do not
meet the affordability requirements as calculated by the
Exchange Authority.
"Contribution." A payment made by a qualified taxpayer to
either of the following used by an employee to pay for eligible
health insurance costs:
(1) An individual coverage health reimbursement
arrangement.
(2) A qualified small employer health reimbursement
arrangement.
"Department." The Department of Revenue of the Commonwealth.
"Eligible health insurance costs." Premiums incurred by an
employee who purchases a qualified health plan through the
Exchange Authority.
"Employee." An individual employed by a qualified taxpayer
who has provided documentary evidence of the following with the
Exchange Authority:
(1) Residency in this Commonwealth.
(2) Citizenship, lawful presence in the United States or
other qualifications to purchase a health reimbursement
arrangement as provided by Federal law.
"Exchange Authority." The Pennsylvania Health Insurance
Exchange Authority that is established under 40 Pa.C.S. §
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9302(a) (relating to the Pennsylvania Health Insurance Exchange
Authority) and that has established an Office of Fraud
Prevention to address suspected fraud and to prevent fraud .
"Health insurance provider." The term shall have the same
meaning as "health insurance issuer" under 42 U.S.C. § 300gg-
91(b)(2) (relating to definitions).
"Health reimbursement arrangement." A tax-advantaged
arrangement that reimburses individuals for eligible health
insurance costs.
"Individual coverage health reimbursement arrangement." A
type of health reimbursement arrangement funded by an employer
that may be used to reimburse employees for certain health-
related costs subject to a maximum fixed-dollar amount for a
period of time.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified health plan." A health plan as defined in section
1301(a) of the Affordable Care Act (Public Law 111-148, 42
U.S.C. § 18021(a)) that provides health care coverage that has
been certified by the Insurance Department as having met the
criteria specified in 40 Pa.C.S. Chs. 91 (relating to
preliminary provisions) and 93 (relating to State-based
exchange) or any other health care coverage purchased through
the Exchange Authority .
"Qualified small employer health reimbursement arrangement."
A type of health reimbursement arrangement for small business,
as the term is defined in 26 U.S.C. § 9831(d)(2) (relating to
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general exceptions).
"Qualified tax liability." The tax due under Article III,
excluding any tax withheld by an employer from an employee.
"Qualified taxpayer." An individual, partnership,
association or other entity that:
(1) is subject to the tax imposed under Article III;
(2) is required under the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.) to withhold
Federal income tax from wages paid to an employee; and
(3) has 50 or fewer employee