The PA Chamber often credits small businesses for being the backbones of their local economies and infusing culture, vitality and jobs into their communities, which is why we promote efforts to foster small businesses’ success and remove barriers to their progress. Thanks to our advocacy, the state Senate recently passed two bills that are components of the larger Small Business Tax Reform package and would create a more equitable and competitive climate for the state’s small business owners.
Senate Bill 347 would allow for “like-kind” exchanges at the state level – which is allowed at the federal level and in every state but Pennsylvania. According to the Internal Revenue Code, a “like-kind” exchange allows for a tax deferral when one property is exchanged for a similar property. This frees employers up financially to invest in business expansion and job creation. The PA Chamber urged lawmakers to pass this bill and align our state law with federal law, because Pennsylvania’s lack of a “like-kind” exchange tax deferral puts us at a competitive disadvantage.
Our efforts also recently culminated in the passage of S.B. 349, which would align Pennsylvania law with Section 179 of the federal tax code that allows owners of pass-through businesses to take a tax deduction for the full purchase price of qualifying equipment. Right now, Pennsylvania law only allows employers who are subject to the state’s Corporate Income Tax (including most small businesses) to limit their deduction to $25,000 – a far cry from the federal limit of $1.05 million. This bill would increase the deduction to be consistent with the federal limit, giving small business owners the confidence they need to make important investments in their businesses without the fear of taking a financial hit.
In a statement issued after the passage of these bills, PA Chamber President Gene Barr summed up how vital they will be to helping small businesses that are still facing many pandemic-related hurdles. “The Commonwealth needs to be increasingly competitive, for both jobs and capital,” he said. “Companies and investors have choices, both globally and among the states, on where to place their investments and we want businesses to remain here, invest here and grow here. We applaud the PA Senate for passing these crucial pieces of legislation.”