Senate lawmakers were back in Harrisburg last week, where they advanced proposals related to income tax, workforce development, and recognizing veteran-owned businesses.
Here is a rundown of last week’s legislative action most relevant to employers.
Resident Partner Credit (S.B. 253; Mastriano)
The Senate Finance Committee voted 9-2 to advance Senate Bill 253 last Tuesday.
This legislation would allow Pennsylvania resident partners to take a credit against personal income tax for pass-through entity taxes paid to other states, similar to what is already allowed for S-corporation shareholders.
More than 36 states have adopted pass-through entity-level taxes as a result of the $10,000 cap on state and local tax deductions at the federal level.
The Pennsylvania Department of Revenue has taken the position that resident partners are not entitled to a credit against entity-level taxes paid to another state, though they would be entitled if the tax were paid at the individual level in those other states. As a result, Pennsylvania resident partners may face double taxation due to the denial of a resident tax credit.
We supported this legislation (CLICK HERE for our memo), which now moves on to the full Senate for consideration.
Optional SALT Cap Workaround (S.B. 396; Mastriano)
The Senate Finance Committee also voted 9-2 to advance Senate Bill 396 on Tuesday.
This legislation would allow Pennsylvania partnerships or S-corps to elect to recognize income from the operation of the business at the entity-level as opposed to the existing pass-through methodology for income tax purposes.
The Tax Cuts and Jobs Act (TCJA) imposed a $10,000 limit on the maximum deduction taxpayers may claim for certain state and local taxes through 2025 on individuals but not business entities.
The bill would shift state tax liabilities for pass-through entities’ (PTEs) income from the individual back to the PTE, providing relief to owners and shareholders. More than 36 other states have adopted this reform, which has no fiscal impact on the Commonwealth.
We supported this legislation (CLICK HERE for our memo), which now moves to the full Senate.
Sharing Workforce Data (S.B. 101; Bartolotta)
The Senate Labor & Industry Committee advanced Senate Bill 101 last Tuesday.
This legislation would direct the Department of Labor & Industry to share already collected workforce data on wages, new hires, and UC claimants with local workforce development boards.
Local workforce development boards are on the front lines working with claimants to search for work, apply for and accept jobs. These boards are seeking more timely access to existing data sets, including UC claim data, in order to better support their pathway to re-employment through targeted services and activities. Unemployment Compensation and new hire data currently takes up to 24 months to access from the Pennsylvania Department of Labor and Industry. This legislation is one part of a broad strategy to help address labor shortages.
We supported this legislation (CLICK HERE for our memo); it now heads to the full Senate.
Veteran-Owned Business Designation (S.B. 64; Bartolotta)
The Senate Veterans Affairs & Emergency Preparedness Committee unanimously voted to advance Senate Bill 64 on Tuesday.
This legislation would direct the Department of Military & Veterans Affairs to create a logo designating that a business is owned and operated by a veteran.
Given Pennsylvania’s low ranking in yearly entrepreneurship, any opportunity to promote small business development is a step toward fostering a more vibrant and competitive business environment. By highlighting the contributions of veteran entrepreneurs, the bill helps drive economic growth and strengthens Pennsylvania’s entrepreneurial ecosystem.
We supported this bill (CLICK HERE for our memo), which now moves to the full Senate.