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The newest addition to Pennsylvania's array of state tax credits is designed to spur business startups in certain economic sectors.
The Innovate in PA 2.0 Tax Credit is part of the new state budget for Fiscal Year 2026-27.
The tax credits will support grants for startups in life sciences, biotechnology and advanced manufacturing, workforce development partnerships, regional venture studios and programs that leverage federal research and technology funding.
The Innovate tax credit is authorized at $125 million over the rest of the decade. The tax credit will be funded through a creative method: the sale by the state of Insurance Premium Tax Credits to insurance companies.
Insurers will buy a credit thus generating revenue for the program. An insurer would claim the credit in future tax filings.
Proposed by Gov. Josh Shapiro, the Innovate tax credit is the latest effort by a governor to use state tax credits or funds to help new tech businesses gain a footing and create jobs.
Robotics
Shapiro administration officials touted the tax credit during a visit last week to Carnegie Foundry LLC in Pittsburgh, a robotics and artificial intelligence venture studio.
Carnegie Foundry supports startup businesses. It's part of Carnegie Mellon University's Robotics Institute.
"Strategic investment by the Commonwealth 30 years ago was pivotal to our success in transitioning robotics technology to commercialization," said Herman Herman, director of the National Robotics Engineering Center. "The Innovate in PA 2.0 program will have an even larger impact."
"This crucial investment (Innovate tax credit) will strengthen Pennsylvania's status as a national leader in biotech and innovation, continue to attract & retain high-growth companies, and ultimately, connect Pennsylvanians to high-paying jobs in these emerging industries," said Jen Gilburg, a deputy Department of Community and Economic Development secretary, in testimony before the House Communications and Technology Committee last week.
The committee looked at ways to boost quantum computers.
The Innovate tax credit is paired with the $10 million Agriculture Innovation Tax Credit, now in its third year. The Agriculture Department distributed $9.7 million in grants under this program last week to support nearly 100 agricultural projects that use new technology, generate electric power while reducing food waste and support crops that store carbon or replace non-renewable resources.
Grants went to projects using artificial intelligence, robotics and drones among other innovative technology.