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Legislative Update - Week Ending Jan. 3, 2025
In this issue: Pa. General Assembly prepares for 2025-2026 session; New Pennsylvania annual reporting requirement takes effect; Member shares her PICPA advocacy experience; and more.
by PICPA Government Relations
Jan 3, 2025, 10:04 AM
- General Assembly Prepares for the 2025-2026 Session
- New State-Level Annual Reporting Requirement for Businesses Takes Effect
- Member Shares Her PICPA Advocacy Experience
- New Keystone Login Coming to Online Applications
- Erie and Reading Designated Economic Development Zones
- IFO Report on Pennsylvania Tax Credits and Incentives
- December State Revenue Collections
General Assembly Prepares for the 2025-2026 Session
The Pennsylvania General Assembly’s 2025-2026 legislative session kicks off Tuesday, Jan. 7, 2025, against the backdrop of a closely divided legislature preparing to address a variety of critical issues. Republicans hold a 27-22 majority in the State Senate, with one seat currently vacant. Democrats maintain a narrow 102-101 majority in the State House, setting the stage for either legislative gridlock or compromise.
On Feb. 4, Gov. Josh Shapiro will deliver his third budget address to a joint session of the General Assembly. Shapiro is expected to call for increased funding in public education and creating a dedicated funding source for mass transit systems throughout the state. Following his address, the appropriations committees in both chambers will conduct several weeks of public hearings on the proposed budget. The hearings provide lawmakers and the public with an opportunity to examine the administration’s fiscal and policy priorities for the year ahead.
The pace of legislative activity is not expected to pick up until after budget hearings. The House and Senate session calendars for the first half of 2025 can be found in a previous issue of Legislative Update.
A complete roster of committee chairs and assignments is expected to be announced in the coming days.
New State-Level Annual Reporting Requirement for Businesses Takes Effect
Act 122 of 2022 was signed into law by then Gov. Tom Wolf on Nov. 3, 2022. The new law creates an annual report requirement for domestic and foreign business filing associations rather than the long-standing 10-year reporting requirement for these associations, which has been repealed.
The new annual filing applies to a broad range of business entities, including domestic business corporations, domestic nonprofit corporations, and domestic limited liability (general) partnerships. It also covers domestic electing partnerships that are not limited partnerships, domestic limited partnerships (including limited liability limited partnerships), domestic limited liability companies, domestic professional associations, domestic business trusts, and all registered foreign associations.
Annual reporting begins in calendar year 2025. Like other states, failure to file the annual report will subject the association to administrative dissolution, termination, or cancellation and a loss of the protection of its name.
The Pennsylvania Department of State has more about the new reporting requirements.
Member Shares Her PICPA Advocacy Experience
Advocacy is an important part of PICPA’s mission, and every member can make a big difference ... even if it’s as simple as showing up at their local legislator’s town hall meeting. In this PICPA CPA Now blog, “Breaking New Ground in Advocacy: A CPAs Journey into Retail Politics,” Kathy Bell, CPA, MST, and member of the CPA-PAC Board of Trustees, shares her story about stepping into the political arena.
“Early in October, I received a postcard from my Pennsylvania state senator inviting me to an event at the East Hempfield Township offices where constituents could discuss relevant issues with him,” writes Bell. “I immediately decided I wasn’t going to go.” After thinking about it, she eventually decided to attend the event.
Advocacy “is something all members should strive to support,” explains Bell. “Some donate to our CPA-PAC, others go out and meet with their representatives. Whichever route you choose will help the PICPA and the accounting profession achieve its goals.”
Want to follow Bell’s example and extend your hand for the PICPA and the profession? Plan to attend PICPA’s Day on the Hill on June 4.
New Keystone Login Coming to Online Applications
The Pennsylvania Department of Revenue announced that starting in the first quarter of 2025 it will be transitioning to the Keystone Login account management system for several of its online applications.
This means taxpayers and other users who use the online applications listed below will need to sign up for a new Keystone Login account:
- Board of Appeals (BOA) Online Petition Center
- Small Games of Chance (SGOC) Reporting
- Tax Credit Broker Registration
- Neighborhood Improvement Zone (NIZ) program, City Revitalization and Improvement Zone (CRIZ) program, and Military Installation Remediation Program (MIRP)
No information has been communicated to key stakeholders as of Jan. 3, 2025, but the DOR has indicated that it will be sending direct communications to users of these online applications to alert them that they will need a Keystone Login account to continue using these services.
The goal of this initiative, notes the DOR, is to create one online account management system across government agencies under the governor’s jurisdiction.
Erie and Reading Designated Economic Development Zones
The Shapiro administration created new economic development zones in Erie and Reading by approving their applications to participate in the City Revitalization and Improvement Zone (CRIZ) program. CRIZ helps cities that have faced economic challenges revitalize their downtowns by renovating vacant or rundown spaces with the goal of attracting new businesses and creating jobs.
A CRIZ is an area of up to 130 acres – comprised of parcels designated by a contracting authority – that provides economic development and job creation within a political subdivision. State and local taxes collected within the CRIZ are used to stimulate economic development projects within the designated area. The CRIZ program is administered by the Department of Revenue and Department of Community and Economic Development as well as the Governor’s Budget Office.
Last year, nearly $15 million was returned to the three communities participating in the CRIZ program – Lancaster, Bethlehem, and Tamaqua.
IFO Report on Pennsylvania Tax Credits and Incentives
The Pennsylvania Independent Fiscal Office (IFO) released its “Tax Credits and Economic Development Incentives” report in December 2024. The report offers a comprehensive overview of the state’s efforts to stimulate economic growth and support businesses and residents through tax incentives from fiscal years (FY) 2018-2019 through 2023-2024. In FY 2023-2024, $1.10 billion of tax credits were claimed or awarded, an increase of $302 million over the prior year. For FY 2024-2025, $1.56 billion is projected for these incentives, IFO writes.
The report covers numerous programs. Some of the key highlights follow.
In FY 2023-2024, taxpayers claimed $417 million in Educational Improvement Tax Credits (EITC) and $77 million in Educational Opportunity Scholarship Tax Credits (OSTC). In total, use of educational tax credits increased $134 million from FY 2022-2023. Act 55 of 2024 increased the program caps from $470 million to $540 million for the EITC and from $85 million to $90 million for the OSTC.
Act 56 of 2024 implemented changes to various tax credit programs, including significant increases to annual caps. The Historic Preservation Tax Credit cap increased from $5 million to $20 million, while the Coal Refuse Energy and Reclamation Tax Credit cap rose from $20 million to $55 million.
The Neighborhood Assistance Tax Credit cap doubled from $36 million to $72 million. Additionally, the act permits $50 million in new investment authority – $30 million of which represents credit-eligible contributions – for the Rural Jobs and Investment Tax Credit.
In FY 2023-2024, over $585 million was spent or allocated for economic development projects, an increase of $56 million from the prior year. An estimated $872 million is budgeted for economic development projects and grants in FY 2024-2025.
In FY 2023-2024, $56 million was spent on programs dedicated to job training and workforce development. An estimated $80 million has been approved for FY 2024-2025.
In FY 2023-2024, nearly $36 million was approved in loans for economic development, an $11 million (24%) decrease from the prior year. The state’s loan program budget is $75 million for FY 2024-2025.
December State Revenue Collections
Pennsylvania collected $3.8 billion in General Fund revenue in December, which was $87.2 million, or 2.3%, less than anticipated, the Department of Revenue reported. Fiscal year-to-date General Fund collections total $20.2 billion, which is $97.1 million, or 0.5%, below estimate.
The Independent Fiscal Office (IFO) reports that actual collections for the month were $36 million (1.0%) below its projections, primarily due to the delayed deposit of $30 million in licenses and fees revenue. Compared to the same month in the prior year, December 2024 General Fund revenues of $3.77 billion reflect an increase of $74 million (2.0%), notes IFO.
Sales tax receipts totaled $1.2 billion for December, $6.0 million below estimate. Year-to-date sales tax collections total $7.3 billion, which is $19.8 million, or 0.3%, more than anticipated.
Personal income tax (PIT) revenue in December was $1.3 billion, $36.6 million below estimate. This brings year-to-date PIT collections to $7.8 billion, which is $99.6 million, or 1.3%, below estimate.
December corporate tax revenue of $882.5 million was $29.7 million above estimate. Year-to-date corporate tax collections total $2.6 billion, which is $39.8 million, or 1.5%, below estimate.
Read more on December’s revenue activities.
Legislative Update - Week Ending Jan. 3, 2025
In this issue: Pa. General Assembly prepares for 2025-2026 session; New Pennsylvania annual reporting requirement takes effect; Member shares her PICPA advocacy experience; and more.
by PICPA Government Relations
Jan 3, 2025, 10:04 AM
- General Assembly Prepares for the 2025-2026 Session
- New State-Level Annual Reporting Requirement for Businesses Takes Effect
- Member Shares Her PICPA Advocacy Experience
- New Keystone Login Coming to Online Applications
- Erie and Reading Designated Economic Development Zones
- IFO Report on Pennsylvania Tax Credits and Incentives
- December State Revenue Collections
General Assembly Prepares for the 2025-2026 Session
The Pennsylvania General Assembly’s 2025-2026 legislative session kicks off Tuesday, Jan. 7, 2025, against the backdrop of a closely divided legislature preparing to address a variety of critical issues. Republicans hold a 27-22 majority in the State Senate, with one seat currently vacant. Democrats maintain a narrow 102-101 majority in the State House, setting the stage for either legislative gridlock or compromise.
On Feb. 4, Gov. Josh Shapiro will deliver his third budget address to a joint session of the General Assembly. Shapiro is expected to call for increased funding in public education and creating a dedicated funding source for mass transit systems throughout the state. Following his address, the appropriations committees in both chambers will conduct several weeks of public hearings on the proposed budget. The hearings provide lawmakers and the public with an opportunity to examine the administration’s fiscal and policy priorities for the year ahead.
The pace of legislative activity is not expected to pick up until after budget hearings. The House and Senate session calendars for the first half of 2025 can be found in a previous issue of Legislative Update.
A complete roster of committee chairs and assignments is expected to be announced in the coming days.
New State-Level Annual Reporting Requirement for Businesses Takes Effect
Act 122 of 2022 was signed into law by then Gov. Tom Wolf on Nov. 3, 2022. The new law creates an annual report requirement for domestic and foreign business filing associations rather than the long-standing 10-year reporting requirement for these associations, which has been repealed.
The new annual filing applies to a broad range of business entities, including domestic business corporations, domestic nonprofit corporations, and domestic limited liability (general) partnerships. It also covers domestic electing partnerships that are not limited partnerships, domestic limited partnerships (including limited liability limited partnerships), domestic limited liability companies, domestic professional associations, domestic business trusts, and all registered foreign associations.
Annual reporting begins in calendar year 2025. Like other states, failure to file the annual report will subject the association to administrative dissolution, termination, or cancellation and a loss of the protection of its name.
The Pennsylvania Department of State has more about the new reporting requirements.
Member Shares Her PICPA Advocacy Experience
Advocacy is an important part of PICPA’s mission, and every member can make a big difference ... even if it’s as simple as showing up at their local legislator’s town hall meeting. In this PICPA CPA Now blog, “Breaking New Ground in Advocacy: A CPAs Journey into Retail Politics,” Kathy Bell, CPA, MST, and member of the CPA-PAC Board of Trustees, shares her story about stepping into the political arena.
“Early in October, I received a postcard from my Pennsylvania state senator inviting me to an event at the East Hempfield Township offices where constituents could discuss relevant issues with him,” writes Bell. “I immediately decided I wasn’t going to go.” After thinking about it, she eventually decided to attend the event.
Advocacy “is something all members should strive to support,” explains Bell. “Some donate to our CPA-PAC, others go out and meet with their representatives. Whichever route you choose will help the PICPA and the accounting profession achieve its goals.”
Want to follow Bell’s example and extend your hand for the PICPA and the profession? Plan to attend PICPA’s Day on the Hill on June 4.
New Keystone Login Coming to Online Applications
The Pennsylvania Department of Revenue announced that starting in the first quarter of 2025 it will be transitioning to the Keystone Login account management system for several of its online applications.
This means taxpayers and other users who use the online applications listed below will need to sign up for a new Keystone Login account:
- Board of Appeals (BOA) Online Petition Center
- Small Games of Chance (SGOC) Reporting
- Tax Credit Broker Registration
- Neighborhood Improvement Zone (NIZ) program, City Revitalization and Improvement Zone (CRIZ) program, and Military Installation Remediation Program (MIRP)
No information has been communicated to key stakeholders as of Jan. 3, 2025, but the DOR has indicated that it will be sending direct communications to users of these online applications to alert them that they will need a Keystone Login account to continue using these services.
The goal of this initiative, notes the DOR, is to create one online account management system across government agencies under the governor’s jurisdiction.
Erie and Reading Designated Economic Development Zones
The Shapiro administration created new economic development zones in Erie and Reading by approving their applications to participate in the City Revitalization and Improvement Zone (CRIZ) program. CRIZ helps cities that have faced economic challenges revitalize their downtowns by renovating vacant or rundown spaces with the goal of attracting new businesses and creating jobs.
A CRIZ is an area of up to 130 acres – comprised of parcels designated by a contracting authority – that provides economic development and job creation within a political subdivision. State and local taxes collected within the CRIZ are used to stimulate economic development projects within the designated area. The CRIZ program is administered by the Department of Revenue and Department of Community and Economic Development as well as the Governor’s Budget Office.
Last year, nearly $15 million was returned to the three communities participating in the CRIZ program – Lancaster, Bethlehem, and Tamaqua.
IFO Report on Pennsylvania Tax Credits and Incentives
The Pennsylvania Independent Fiscal Office (IFO) released its “Tax Credits and Economic Development Incentives” report in December 2024. The report offers a comprehensive overview of the state’s efforts to stimulate economic growth and support businesses and residents through tax incentives from fiscal years (FY) 2018-2019 through 2023-2024. In FY 2023-2024, $1.10 billion of tax credits were claimed or awarded, an increase of $302 million over the prior year. For FY 2024-2025, $1.56 billion is projected for these incentives, IFO writes.
The report covers numerous programs. Some of the key highlights follow.
In FY 2023-2024, taxpayers claimed $417 million in Educational Improvement Tax Credits (EITC) and $77 million in Educational Opportunity Scholarship Tax Credits (OSTC). In total, use of educational tax credits increased $134 million from FY 2022-2023. Act 55 of 2024 increased the program caps from $470 million to $540 million for the EITC and from $85 million to $90 million for the OSTC.
Act 56 of 2024 implemented changes to various tax credit programs, including significant increases to annual caps. The Historic Preservation Tax Credit cap increased from $5 million to $20 million, while the Coal Refuse Energy and Reclamation Tax Credit cap rose from $20 million to $55 million.
The Neighborhood Assistance Tax Credit cap doubled from $36 million to $72 million. Additionally, the act permits $50 million in new investment authority – $30 million of which represents credit-eligible contributions – for the Rural Jobs and Investment Tax Credit.
In FY 2023-2024, over $585 million was spent or allocated for economic development projects, an increase of $56 million from the prior year. An estimated $872 million is budgeted for economic development projects and grants in FY 2024-2025.
In FY 2023-2024, $56 million was spent on programs dedicated to job training and workforce development. An estimated $80 million has been approved for FY 2024-2025.
In FY 2023-2024, nearly $36 million was approved in loans for economic development, an $11 million (24%) decrease from the prior year. The state’s loan program budget is $75 million for FY 2024-2025.
December State Revenue Collections
Pennsylvania collected $3.8 billion in General Fund revenue in December, which was $87.2 million, or 2.3%, less than anticipated, the Department of Revenue reported. Fiscal year-to-date General Fund collections total $20.2 billion, which is $97.1 million, or 0.5%, below estimate.
The Independent Fiscal Office (IFO) reports that actual collections for the month were $36 million (1.0%) below its projections, primarily due to the delayed deposit of $30 million in licenses and fees revenue. Compared to the same month in the prior year, December 2024 General Fund revenues of $3.77 billion reflect an increase of $74 million (2.0%), notes IFO.
Sales tax receipts totaled $1.2 billion for December, $6.0 million below estimate. Year-to-date sales tax collections total $7.3 billion, which is $19.8 million, or 0.3%, more than anticipated.
Personal income tax (PIT) revenue in December was $1.3 billion, $36.6 million below estimate. This brings year-to-date PIT collections to $7.8 billion, which is $99.6 million, or 1.3%, below estimate.
December corporate tax revenue of $882.5 million was $29.7 million above estimate. Year-to-date corporate tax collections total $2.6 billion, which is $39.8 million, or 1.5%, below estimate.
Read more on December’s revenue activities.
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