Pennsylvania HB 2706: An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, establishing the Pennsylvania Child and Dependent Care Enhancement Tax Credit Program; and making a repeal.

Bill Text

PRINTER'S NO. 3782
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2706
Session of
2026
INTRODUCED BY SHUSTERMAN, T. DAVIS, HILL-EVANS, MAYES, GUZMAN,
KHAN, PARKER, SANCHEZ, OTTEN, D. WILLIAMS, FREEMAN, McANDREW,
RIVERA, BOROWSKI, GUENST, HANBIDGE, CARROLL, TIBURCIO, HOWARD
AND STEELE, JULY 16, 2026
REFERRED TO COMMITTEE ON FINANCE, JULY 16, 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," establishing the Pennsylvania Child and Dependent
Care Enhancement Tax Credit Program; and making a repeal.
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
PENNSYLVANIA CHILD AND DEPENDENT
CARE ENHANCEMENT TAX CREDIT PROGRAM
Section 1901-L. Scope of article.
This article relates to the Pennsylvania Child and Dependent
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Care Enhancement Tax Credit Program.
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:
"Applicable percent."
(1) For taxable years ending before January 1, 2027, as
defined in section 21(a)(2) of the Internal Revenue Code of
1986 in effect for the taxable years beginning after December
31, 2021, and ending before January 1, 2023.
(2) For taxable years beginning after December 31, 2026,
as defined in section 21(a)(2) of the Internal Revenue Code
of 1986, as amended.
"Department." The Department of Revenue of the Commonwealth.
"Employment-related expenses." As defined in section 21(b)
(2) of the Internal Revenue Code of 1986.
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Qualifying individual." As defined in section 21(b)(1) of
the Internal Revenue Code of 1986.
"Resident individual." An individual who meets any of the
following criteria:
(1) Is domiciled in this Commonwealth, unless the
individual maintains no permanent place of abode in this
Commonwealth and does maintain a permanent place of abode
elsewhere and spends in the aggregate no more than 30 days of
the taxable year in this Commonwealth.
(2) Is not domiciled in this Commonwealth, but maintains
a permanent place of abode in this Commonwealth and spends in
the aggregate more than 183 days of the taxable year in this
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Commonwealth.
"Section 21 of the Internal Revenue Code of 1986." Section
21 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. § 21).
"Tax credit." The Pennsylvania child and dependent care
enhancement tax credit provided for under this article.
"Tax liability." The liability for taxes imposed under
Article III, excluding any tax withheld by an employer under
Article III of the Tax Reform Code of 1971.
"Taxable year." As defined in section 301.
"Taxpayer." A resident individual subject to the tax imposed
under Article III.
Section 1903-L. Credit for child and dependent care employment-
related expenses.
(a) Tax credit.--For taxable years beginning after December
31, 2021, a taxpayer who receives a credit under section 21 of
the Internal Revenue Code of 1986 may claim a tax credit against
the taxpayer's tax liability.
(b) Amount of tax credit.--The amount of the tax credit
under subsection (a) for the taxable year beginning after
December 31, 2021, and ending before January 1, 2023, shall be
equal to 30% of:
(1) the actual amount of employment-related expenses
incurred by the taxpayer and claimed for the Federal tax
credit under section 21 of the Internal Revenue Code of 1986
during the prior taxable year or the following, as
applicable, whichever is less:
(i) $3,000 for one qualifying individual with
respect to the taxpayer; or
(ii) $6,000 for two or more qualifying individuals
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with respect to the taxpayer; multiplied by
(2) the applicable percent, with respect to the
taxpayer, in effect for the taxable year beginning after
December 31, 2021, and ending before January 1, 2023.
(c) Amount of tax credit in taxable years before January 1,
2027.--The amount of the tax credit under subsection (a) for
taxable years beginning after December 31, 2022, and ending
before January 1, 2027, shall be equal to 1