An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in Pennsylvania Economic Development for a Growing Economy (PA EDGE) Tax Credits, repealing provisions relating to local resource manufacturing, providing for Reliable Energy Investment Tax Credit, repealing provisions relating to Pennsylvania milk processing and providing for Pennsylvania milk processing; in regional clean hydrogen hubs, further providing for definitions, for eligibility, for application and approval of tax credit, for use of tax credits and for applicability; in semiconductor manufacturing and biomedical manufacturing and research, further providing for definitions and for application and approval of tax credit and providing for geothermal energy and for sustainable aviation fuel; and, in application of Prevailing Wage Act, further providing for definitions.

2025-2026 Regular Session Introduced by Aerion Abney and 42 co-sponsors

PA eliminates traditional manufacturing tax credits while creating new incentives for clean energy and semiconductors, applying prevailing wage requirements that increase costs but reduce state revenue.

Referred to Finance

Legislative bill overview

HB 500 significantly revises Pennsylvania's tax credit system for economic development, eliminating some existing credits (local resource manufacturing, milk processing) while establishing or expanding new ones focused on clean energy industries (hydrogen hubs, geothermal, sustainable aviation fuel) and advanced manufacturing (semiconductors, biomedical). The bill also applies prevailing wage requirements to these tax credit programs.

Why is this important

Tax credits directly reduce state revenue and shape which industries receive public incentives. This bill represents a substantial policy shift from traditional manufacturing support toward clean energy and high-tech sectors, reflecting changing state economic priorities. The prevailing wage requirement significantly increases program costs by mandating higher labor standards for supported projects.

Potential points of contention

Revenue impact: Expanding tax credits reduces state revenue for education, infrastructure, and services; actual fiscal cost depends on credit utilization rates not detailed in the bill summary

Market fairness: Eliminating local resource manufacturing credits while creating new ones for clean energy may disadvantage existing agricultural/traditional industries that lose support

Prevailing wage burden: Mandatory prevailing wage requirements substantially increase project costs, potentially making tax credits less attractive or limiting which companies can participate, raising questions about program effectiveness and competitiveness

Definitional ambiguity: The bill references "further providing for definitions" without showing what definitions changed, making it unclear which projects actually qualify