Several bills to simplify the tax code for Pennsylvania residents and small businesses were approved by the Pennsylvania House of Representatives this week.
House Bills 199, HB 285 and HB 333 each passed the House of Representatives on Tuesday and are now heading to the Senate for consideration.
“Small businesses have a reputation for being job creators and economic engines in Pennsylvania. But they have been devastated by the pandemic-related shutdowns and supply chain disruptions,” said PA House Majority Caucus Chairman Rep. George Dunbar (R-Westmoreland). “Simplifying the tax code will be a significant way to help them and Pennsylvania’s economy as a whole continue to recover.”
HB 199 is aimed at landowners who receive royalties for extracted resources by allowing them to account for the percentage depletion of a mine, oil and gas well or other natural deposits when depositing their personal income tax (IPP). This bill brings the state tax code into line with federal tax laws.
“Making the deduction process compliant with federal regulations will make it easier to navigate and less cumbersome,” said Dunbar, HB 199’s main sponsor. “just get away from the deduction. By matching state law to federal law, we eliminate that bureaucracy.”
HB 285 would allow the deferral of taxation on a lump sum distribution from employee stock ownership plans (ESOPs). The legislation, sponsored by Rep. Daryl Metcalfe (R-Butler), would put the state on a level playing field with the rest of the nation and allow certain business owners who sell stock to an ESOP to defer taxes on capital gains received on the sale of the business. .
“The purpose of my legislation is to incentivize family businesses and other employers to sell their business to an ESOP rather than to outsiders whose intentions and current employee fates are almost always unknown,” Rep. Metcalfe said. earlier this month. .
HB 333 would increase small business deductions for depreciation of machinery and equipment from $25,000 to $1.05 million.
“Thank you PA House for your bipartisan passage of a key part of our Propel PA Forward initiative,” the Pennsylvania Chamber of Commerce and Industry tweeted on Tuesday. “Rep. Eric Nelson’s HB 333 would provide much needed relief to job makers looking to reinvest in the Commonwealth. #RestorePA‘s Competitiveness.
Another bill to reduce corporate taxes, HB 1960, is still before the House Appropriations Committee. Sponsored by Rep. Joshua Kail (R-Beaver/Washington), HB 1960 would increase the net operating loss paid by net corporate income tax recipients by 40% to 80% over the next four years.
The Pennsylvania Manufacturers’ Association (PMA) said the bills would encourage small businesses to grow and create jobs while modernizing the state’s tax code.
“These growth-friendly tax improvements are a real investment in enabling the private sector to create well-paying jobs and help grow the economy,” said PMA President and CEO David N. Taylor, in a recent blog post. “A short-term sacrifice of income today can result in a broader, more vibrant economy in just a few years.”