Keystone Innovation Zone (KIZ) Tax Credit

Keystone Innovation Zone (KIZ) Tax Credit

Supports young Pennsylvania technology firms in Keystone Innovation Zones through targeted tax incentives.

Eligibility · United States · US-PA

The Pennsylvania Keystone Innovation Zone (KIZ) Tax Credit Program rewards early-stage, for-profit companies that generate revenue growth inside one of the state's designated Keystone Innovation Zones. Established to accelerate commercialization near research institutions, the program is administered by the Department of Community and Economic Development (DCED). Each qualifying company may claim a credit equal to 50% of its year-over-year revenue growth attributable to operations within its KIZ, subject to a per-company annual cap of $100,000. The statewide annual program cap is $15 million in tax credits issued.

Eligibility requires that the applicant be a for-profit entity under eight years of age from formation, physically located within the geographic boundaries of a designated KIZ, and operating in one of the targeted industry sectors specified for that particular zone — sectors vary by zone. Nonprofits, universities, and individuals cannot claim this credit. Applications must be submitted on or before December 1 of each year; DCED issues awards the following May 1, implying a review period of approximately five months. Unused credits can be applied against tax liability in up to five subsequent years and may be reassigned or sold to other Pennsylvania taxpayers, providing liquidity for companies with limited current-year state tax exposure.

Companies preparing to apply should first confirm their address falls within a qualifying KIZ boundary and that their industry aligns with that zone's targeted sectors — both can be verified through the zone's local managing partner organization. Applicants should then document their revenue figures for both the current and prior year within the zone, calculate the 50% credit on growth, and ensure overall state tax compliance before submitting through DCED's programs portal. Given the December 1 deadline and May 1 award issuance cycle, planning ahead by mid-fall each year is advisable.