SPOTLIGHT PROGRAMS

Keystone Opportunity Zone (KOZ): Businesses that are located in a KOZ are eligible for credits, waivers and broad-based exemptions on state and local taxes until the zone’s expiration date (zones have varying expiration dates). The effective tax burden for a company may be reduced to zero.  To qualify, existing businesses that relocate from a non-KOZ Pennsylvania location to a KOZ must increase full-time employment by 20% within the first full year of operation or make a capital investment equal to 10% of gross revenues from the previous fiscal year that were attributable to the business operation(s) relocating to the KOZ.  

Redevelopment Assistance Capital Program (RACP): This is a discretionary program designed for competitive projects that generate substantial economic impact. Securing funds is complex, as it requires detailed itemization. Specifically, projects must be included in the Capital Budget Project Itemization Acts, which are passed by the General Assembly and signed into law by the Governor. To qualify, the projects must have a cost exceeding $1,000,000 and have 50% matching funds at the time of formal application.

Pennsylvania First Program (PA First): The program offers upfront grants, loans or loan guarantees for large-scale competitive “targeted industry” projects that involve significant job growth and capital investment. Program funds may be used to offset “eligible” costs, including building improvements, capital expenditures, environmental assessments, and others.

TAX CREDITS

Manufacturing Tax Credit (MTC): This program provides tax credits to taxpayers who increase their annual taxable payroll by $1,000,000 through the creation of new full-time jobs. Tax credit awards shall be equal to 5% of the taxpayers’ increase in annual taxable payroll, if increased by at least $1,000,000 above a pre-determined base year amount. Maximum credit may not exceed $4 million.

Research and Development Tax Credit: Offers a non-refundable tax credit equal to 10% of a company’s R&D expenses over a base period. The tax credit can be sold or assigned and may be carried forward for up to 15 years.  Eligible businesses must conduct qualified research in Pennsylvania, be subject to Corporate Net Income Tax or Personal Income Tax and have at least two years of R&D expenditures.

PA EDGE Tax Credit: Tax credits are available to qualified taxpayers across several programs, including the Local Resource Manufacturing Tax Credit, Pennsylvania Milk Processing Tax Credit, Regional Clean Hydrogen Hub Tax Credit, and Semiconductor Manufacturing, Biomedical Manufacturing, and Research Tax Credit. The PA EDGE tax credit is limited to 20% of the taxpayer’s qualified tax liabilities for the taxable year, which can include various taxes such as corporate net income, personal income, and others. If a taxpayer holds the credit through the end of the calendar year it was granted, they may sell or assign it, allowing the buyer to offset up to 50%of their own qualified tax liability.

PA Resource Manufacturing Tax Credit(PRM): Any manufacturer purchasing natural gas containing ethane as a petrochemical feedstock at a facility within the Commonwealth could be eligible for a PRM Tax Credit, equal to five cents per gallon ($2.10 per barrel) of ethane purchased and used in manufacturing ethylene. To be eligible, a company must make a capital investment of at least $1 billion and create the equivalent of at least2,500 full-time jobs while constructing the manufacturing facility.  

Qualified Manufacturing Innovation & Reinvestment Deduction: The program offers tax deduction for manufacturers that invest in new or refurbished manufacturing capacity, with the maximum deduction varying based on the investment amount. For investments of $100 million or less, the maximum deduction over 10 years is 37.5% of the capital investment, with a 7.5% maximum in any single tax year. For investments over $100 million, the maximum deduction is 25% over 10 years, with a 5% maximum in any single tax year.  A business cannot use the deduction to reduce its tax liability by more than 50% of their Corporate Net Income tax liability. The deduction is non-transferable. Any unused portion in a tax year shall expire at the end of the corresponding tax year.

TAX EXEMPTIONS AND ABATEMENTS

Local Economic Revitalization Tax Assistance (LERTA): This program allows local taxing authorities to provide real property tax exemptions for large scale projects that construct or redevelop properties in blighted or deteriorating areas. The exemptions apply to the assessed value of new construction and the assessed value of improvements made to an existing building. The tax abatement allows property owners to pay reduced taxes on the improved assessed value for ten years, starting with a 100% abatement in the first year and decreasing to 10% by the tenth year. In addition to LERTA, Pennsylvania permits local taxing jurisdictions to use tax increment financing (TIF) to spur redevelopment projects in blighted areas. 

Blighted Property Tax Exemption: Local taxing authorities have the option to designate deteriorated areas within their communities and offer tax abatements to developers and property owners who are approved to rebuild or improve the blighted property. Properties must fulfill specific requirements, such as being a “blighted property,” correcting all code violations, conforming to zoning requirements and increasing the property value by at least twenty-five percent. The tax abatement applies to new taxes created as a result of the developer or property owner’s investment. The term is negotiable and typically is less than ten years.

DIRECT FINANCIAL ASSISTANCE

PA Sites Program: This program is a statewide site‑readiness program administered by DCED that provides grant and loan funding to support site planning and infrastructure improvements for competitive commercial and industrial projects. The program includes planning grants for feasibility studies and site planning, and construction grants and Loans to fund infrastructure such as transportation access, utilities, grading, and site preparation. Funding is awarded competitively and is supported by $400 million in total program funding. No one planning project shall exceed $250,000 and aggregate funding for one company for all grants shall not exceed $5 million.

Pennsylvania First Program (PAFirst): The program offers upfront grants, loans or loan guarantees for large-scale competitive “targeted industry” projects that involve significant job growth and capital investment. Eligible costs include, but not limited to, building improvements, capital expenditures and environmental assessments.  The maximum amount of assistance is capped at $5,000 per job.

Pennsylvania Industrial Development Authority (PIDA) Loan: Businesses that commit to creating or retaining jobs may qualify for low-interest loans tohelp finance eligible project expenditures, including land and building costs, as well as machinery and equipment costs. The largest loan amounts are reserved for land acquisition, with a maximum loan of up to $2.25 million or 75% of total eligible land costs.

Industrial Sites Reuse Program(ISRP): Provides grants and low-interest loan financing to perform environmental site assessment and remediation work at former industrial sites. The maximum grant or loan for any assessment project cannot exceed 75% of the total cost of the assessment, or $200,000, whichever is less, in a single fiscal year. The maximum amount to be awarded for any remediation project cannot exceed 75% of the total cost of remediation, or $1 million for grant recipients, whichever is less, in a single fiscal year. Remediation loans may exceed $1 million based on the substantiated need for low-interest financing to maintain the validity of the remediation project. 

Computer Data Center Equipment Exemption Program: Computer data center equipment is exempt from Pennsylvania sales and use tax when it is sold to, used, or consumed in a certified data center, by an owner, operator, or qualified tenant who holds a Computer Data Center Sales and Use Tax Certificate of Exemption issued by the Pennsylvania Department of Revenue.

Building PA: The program provides low-interest loans to businesses and developers for construction, expansion, or renovation projects that create or retain jobs in the State. It supports projects in sectors like manufacturing, technology, and warehousing, aiming to boost economic growth and infrastructure development in the state. Loan amount cannot exceed the amount of equity in the project.

Last updated: April 2026‍