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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.

2025-2026 Regular Session Introduced by Maria Collett and 8 co-sponsors

SB 1389 creates a Small Business Health Care Premiums Contribution Tax Credit to reduce after-tax costs for small employers offering employee health insurance.

Referred to Finance
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WeVote Research Nonpartisan
Bill Summary · SB 1389

Overview

  • Bill: SB 1389
  • Session: Pennsylvania 2025-2026
  • Prime Sponsor: Senator Nick Pisciottano
  • Co-sponsors: Wayne Fontana, Art Haywood, Jay Costa, Katie Muth, Maria Collett, Judith Schwank, James Malone, Nick Miller
  • Current Status: Referred to the Senate Finance Committee on June 26, 2026

Purpose and intent

SB 1389 amends the Pennsylvania Tax Reform Code of 1971 to create a Small Business Health Care Premiums Contribution Tax Credit. The bill is designed to incentivize small businesses to provide health insurance for their employees by offering a state income tax credit tied to health care premium expenses.

Key provisions and changes

  • Establishment of a Small Business Health Care Premiums Contribution Tax Credit:
    • Purpose: To reduce the after-tax cost of health care premiums that small businesses pay for employee health coverage.
    • Target: Small businesses (specific eligibility criteria to define “small” would be in the bill text; the summary indicates the credit is for small business health care premiums).
  • Credit mechanics (details to be confirmed in the full text, but typical elements include):
    • Credit amount: Likely a percent of health care premium costs paid by the employer or a tiered amount depending on firm size or premium level.
    • Caps: Possible annual limits on the credit or aggregate program cap.
    • Carryover: Provisions for any unused credits (e.g., carryforward or refundable features).
  • Interaction with other credits/deductions:
    • Clarifications on how this credit interacts with existing tax credits for health care or with the federal tax treatment of premium expenses.
  • Administration and compliance:
    • Requirements for documentation of premiums paid.
    • Timelines for claiming the credit (tax year alignment, filing forms, etc.).

Note: The available summary does not include the exact numeric credit rate, caps, or eligibility thresholds. The full text would specify precise dollar amounts, percentage rates, caps, and qualification criteria.

Who is affected

  • Primary: Small businesses that purchase health insurance premiums for their employees and meet the bill’s eligibility criteria.
  • Beneficiaries: Employers seeking to reduce after-tax costs of providing health coverage; potentially, indirectly, employees who gain access to health insurance as a result of increased employer participation.
  • Tax administration: Pennsylvania Department of Revenue would administer the credit, verify eligibility, and process claims.

Procedural and timeline aspects

  • Current action: Referred to the Senate Finance Committee on June 26, 2026.
  • Next steps: If advanced, SB 1389 would proceed through committee consideration, potential amendments, floor votes, and, if enacted, signing by the governor.
  • Effective date and sunset (to be specified in the bill): The text provided does not state a effective date or sunset provisions; the full bill would include these details.

Potential impacts and considerations

  • Economic impact: Could increase employer-sponsored health coverage among small businesses by reducing after-tax costs, potentially improving employee recruitment and retention.
  • Revenue impact: Credits reduce state tax revenue by the amount of credits claimed; the bill would likely include an annual cap and administrative checks to manage cost.
  • Equity considerations: The structure (eligibility, caps, carryovers) would affect which small employers benefit most (e.g., by industry, firm size, or premium levels).

Summary

SB 1389 proposes a new Small Business Health Care Premiums Contribution Tax Credit under Pennsylvania’s Tax Reform Code to reduce the after-tax cost of providing employee health insurance for small businesses. The credit’s detailed parameters—such as eligibility, credit rate, caps, carryovers, and administration—will be defined in the full bill text. The measure has been referred to the Senate Finance Committee, with potential subsequent steps including committee action, floor votes, and, if enacted, implementation upon a specified effective date.

Compiled from official sources — confirm details with the bill’s official record.

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