Tax Fairness in the New Year

It’s 2022, and the PA Chamber is hitting the ground running, advocating for Pennsylvania’s small business community. We kicked off the first legislative session week of the New Year in the state Capitol, voicing our support for legislation that would cut down on the financial hurdles small businesses face as they continue to work through several pandemic-related challenges.

These bills are commonsense solutions to help improve our valued small business community’s fiscal outlook at a time they need it most – and, importantly, they’d bring Pennsylvania’s laws in line with the laws in other states (giving our competitiveness a much-needed boost.)

In memos to lawmakers, the PA Chamber has urged a “yes” vote on these bills – known as the Small Business Tax Fairness Package. They all wait a vote by the full House.

  • House Bill 105 – “Like-Kind” Exchanges: A “like-kind” exchange is the disposal of an asset and acquisition of another without generating a tax liability from the sale of the first asset. This is outlined in IRS Tax law, but Pennsylvania is currently the only state in the country that doesn’t allow for this tax deferral when one property is exchanged for a similar property. House Bill 105 would align Pennsylvania with Federal Tax law, allowing for similar treatment at the state level.
  • House Bill 333 – Section 179 Expense Deductions: In Federal Tax law, Section 179 allows owners of pass-through businesses to take a tax deduction for the full purchase price of qualifying equipment up to $1,000,000. But here in PA, the deduction is limited to a mere $25,000 – dissuading employers from making significant equipment expenditures. House Bill 333 would align Pennsylvania’s limit with the federal limit, encouraging small businesses to make purchases that could significantly improve their operations.
  • House Bill 1960 – Increasing the Corporate Net Loss Deduction Limitation: Start-up and cyclical businesses working through uncertain economic conditions would be helped through this bill, which would increase the tax limit for Net Operating Losses by 10 percent annually until the limitation reaches 80 percent of taxable income in years after 2024. The PA Chamber is telling lawmakers that since new businesses tend to record significant losses in their first few years of operation, and Pennsylvania is one of only two states in the country to cap NOLs, enacting this bill would improve small businesses’ financial outcomes while making the state more attractive to investment.

To move Pennsylvania into a bright economic future, we need to enact policies that cut through partisan politics and aim to help the businesses and the people in our communities thrive with good jobs, better opportunities and an increased desire to live and work in Pennsylvania. This is central to our organization’s Propel PA Forward initiative, a member-driven economic recovery effort geared toward improving the Commonwealth’s competitiveness, infrastructure and workforce and creating equality of opportunity for every Pennsylvanian.