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For companies looking to locate or expand, few issues are as critical as a state’s tax climate. PA’s 9.99 percent Corporate Net Income Tax is the second highest rate in the country. This has driven job creators to more pro-business states to open or expand operations.
The result? PA has lost out on billions of dollars in investment and job opportunities. And that has had a negative impact on our state – and its residents for decades.
But thanks to a bipartisan effort among state lawmakers, much-needed tax reform is now a reality! Act 53 of 2022 – which was signed into law in early July – implements a phased-in reduction of the rate over the course of nine years.
It starts with a 10 percent reduction in 2023 from 9.99 to 8.99, with a 50 percent reduction to 4.99 by 2031. Based on current rates, the full reduction will take Pennsylvania from one of the highest CNI tax rates in the country to the eighth lowest!
The benefits of a CNI reduction go far beyond attracting new business and investment. Studies show that decreasing the CNI will:
– Increase GDP
– Boost wages
– Improve home values
– Create family-sustaining jobs
– Attract and retain new talent
The tax reform package also will benefit small businesses! Small businesses in the Commonwealth will now have the opportunity to defer personal income tax liabilities through “like-kind exchanges” of certain property. That will allow employers to invest in job-creating assets businesses needed to stay competitive. Previously, Pennsylvania was the only state in the country that did not offer this type of deferral.
Additional components make it easier for small business owners to buy equipment and invest in their businesses by allowing for the deduction of qualifying equipment purchases from personal income tax liabilities. These changes will bring Pennsylvania in line with other states and federal tax law.
These benefits illustrate how the historic tax reforms will be a win-win-win for Pennsylvania job creators and residents!
For decades, Pennsylvania’s uncompetitive business tax structure has driven away investment and opportunity to other states. But PA’s economic outlook is looking up thanks to the bipartisan enactment of a historic tax reform package.
An initiative of the PA Chamber of Business and Industry, Together for PA is a partnership of individuals and organizations who believe our state can do better. We are committed to working for policies that strengthen our foundation and increase opportunities for the people of Pennsylvania, beginning with our infrastructure, competitiveness and people.
For decades, Pennsylvania’s uncompetitive business tax structure has driven away investment and opportunity to other states. But that could change in the weeks ahead. State lawmakers are on the cusp of enacting much needed and long overdue reform.
An initiative of the PA Chamber of Business and Industry, Together for PA is a partnership of individuals and organizations who believe our state can do better. We are committed to working for policies that strengthen our foundation and increase opportunities for the people of Pennsylvania, beginning with our infrastructure, competitiveness and people.