Giving Pennsylvania an EDGE with Credits and Incentives | Marcum LLP

Final month Pennsylvania Governor Tom Wolf signed Home Invoice 1059 which incorporates, amongst different provisions, the Pennsylvania Financial Improvement for a Rising Financial system (PA Edge): a program that gives roughly $2 billion in tax incentives to companies in focused industries.

The laws additionally:

• Raises the annual credit score cap on the prevailing Native Useful resource Manufacturing Tax Credit score (LRMTC), which incentivizes corporations to make use of dry pure fuel to supply petrochemicals or fertilizer, from $26.6 million per 12 months to $56.6 million.
• Requires taxpayers to make sure building work is carried out based on the Metal Merchandise Procurement Act in an effort to qualify for the LRMTC.

PA EDGE PROGRAM

What’s PA Edge?

This system establishes three non-refundable however transferrable tax credit:

1. Milk Processing Tax Credit score;
2. Regional Clear Hydrogen Hub Tax Credit score; and
3. Semiconductor Manufacturing, Biomedical Manufacturing and Analysis Tax Credit score.

Who’s eligible and the way a lot are the credit value?

Companies inside every qualifying trade should make investments vital capital in PA by developing a brand new facility and creating a particular variety of jobs. As well as, certified companies should adhere to sure minimal wage requirements and make a good-faith effort to recruit native staff in the course of the building challenge. Taxpayers additionally must be in good standing for all relevant Pennsylvania taxes.

Certified taxpayers trying to acquire a PA EDGE credit score should submit an software to the Pennsylvania Division of Income (DOR) no later than March 1 for certified purchases and/or actions from the prior calendar 12 months.

This program credit certified taxpayers $0.05 per gallon of milk bought and produced from sources completely in Pennsylvania and processed on the new facility.

To qualify, a taxpayer should (amongst different issues):

• Make investments $500 million or extra to construct the milk processing facility in Pennsylvania; and
• Create at the least 1,200 full-time, everlasting jobs.

A certified taxpayer’s complete credit can’t exceed 25% of their capital funding to assemble the certified facility and place it into service.

This program incentivizes the development of unpolluted hydrogen hubs accredited by the U.S. Division of Vitality. The hubs have to be constructed based on the definition outlined within the infrastructure invoice that was signed into regulation in November 2021.

Certified taxpayers are allowed a credit score for a number of of the next:

• $0.81 per kilogram of unpolluted hydrogen bought from a regional clear hydrogen hub inside Pennsylvania and utilized in manufacturing at their new facility.
• $0.47 per unit of pure fuel, bought and used within the manufacturing of hydrogen on the challenge facility.

To qualify, a taxpayer should (amongst different issues):

• Make investments $500 million or extra to construct a challenge facility that’s a part of a regional clear hydrogen hub in Pennsylvania; and
• Create at the least 1,200 full-time, everlasting jobs.

A certified taxpayer’s complete credit can’t exceed 50% of their capital funding to assemble the certified facility and place it into service.

This program allocates $100 million (as much as $20 million yearly over 5 years) for biomedical and semiconductor manufacturing amenities.

The annual credit score allowed per certified taxpayer is restricted to $20 million per 12 months. Of that, $10 million is allotted for semiconductor manufacturing and $10 million is allotted for biomedical manufacturing or biomedical analysis.

Certified taxpayers can declare a credit score for:

• Not more than 2.5% of their capital funding; and
• Pennsylvania revenue tax withheld from workers, as much as $20,000 per worker, for every job created on the facility.

To qualify, a taxpayer should:

• Make investments $200 million or extra to construct a brand new semiconductor manufacturing or biomedical manufacturing or analysis facility in Pennsylvania; and
• Create at the least 800 everlasting jobs.

A certified taxpayer’s complete credit can’t exceed 25% of their capital funding to assemble the certified facility and place it into service.

Depend on Marcum

For added data relating to the Pennsylvania Credit and Incentives alternative and its potential advantages, contact Barry Halpern or your Marcum State and Native Credit and Incentives skilled.