Late last week the PA Senate and House passed House Bill 1342 which was then signed by Governor Tom Wolf on July 8, 2022.
A major component of this Bill is the reduction of the PA corporate net income (CNI) tax rate. The tax rate would be reduced to 8.99% for tax years beginning January 1, 2023. Thereafter, it would be reduced by .5% annually until it reaches 4.99% for tax years beginning January 1, 2031.
Supporters of reducing the CNI tax believe the rate cut will attract more businesses, create jobs, and raise wages in Pennsylvania as well as increase real estate values. Pennsylvania currently assesses a 9.99% tax rate on CNI of C-corporations, the 2nd highest state corporate tax rate in the country.
Louis Plung & Company will soon provide details regarding other Pennsylvania tax law changes contained in this bill in a subsequent blog. These include economic nexus standards and market sourcing rules, as well as Pennsylvania tax treatment of like-kind exchanges.
In the meantime, if you have questions regarding this change in the PA CNI tax, please contact your Louis Plung advisor or email [email protected].