Today, the Pennsylvania Chamber of Business and Industry joined members of the Lehigh Valley’s state legislative delegation, representatives from the Wolf administration, and state and local business leaders for a roundtable and press conference at the Lehigh Valley Economic Development Corporation to highlight how Pennsylvania’s recently enacted state tax reform package will improve the state’s competitiveness and lay the foundation for continued bipartisan success, private sector investment, and economic growth.
“Today’s event is proof that great things happen when we work together for Pennsylvania,” PA Chamber President and CEO Luke Bernstein said. “For far too long, Pennsylvania has had the second-highest Corporate Net Income tax rate in the country, which has been a giant stop sign for companies considering moving and investing here. This tax reform package is an important step toward making Pennsylvania more competitive and showing the world that we’re open for business. We thank the Wolf administration, the General Assembly, and our local partners for working with us in a bipartisan manner to enact critical tax reform measures, and we look forward to continuing to work together to drive Pennsylvania’s economy forward.”
The tax reform package (Act 53 of 2022) – which was enacted as part of the 2022-23 budget agreement – includes a long overdue reduction to the state’s Corporate Net Income Tax rate from 9.99 percent to 4.99 percent – cutting it in half over the course of nine years. Based on current state corporate tax rates, once the law is fully implemented, Pennsylvania will go from imposing one of the nation’s highest CNIT tax rates to the 8th lowest in the country.
“The tax reforms, especially the Corporate Net Income Tax reduction, passed by the General Assembly and signed by the Governor represent the most historic and significant changes to our state’s taxing structure in a generation,” state Senator Pat Browne, R-Lehigh, said. “These changes will create a more competitive business climate within our Commonwealth and help to propel sustainable economic growth, attract new investments and create jobs.”
The benefits of a more competitive business tax code go far beyond improving the state’s business climate. Studies have shown that decreasing the CNIT leads to increased GDP, higher wages, and increased home values, all of which create family sustaining jobs and attract and retain new talent. And in the months since Act 53 has become law, the nonpartisan Tax Foundation provided an updated analysis that shows Pennsylvania will leap from 44th in corporate tax structure among the states to 27th once all the reforms in Act 53 are in effect (assuming other state tax policy remains constant.) In terms of overall competitiveness, the tax package will move the Commonwealth from 29th to 17th overall.
“It’s great to be here today to celebrate these historic tax reform changes,” Governor’s Action Team Executive Director Brent Vernon said. “Events like this one give us the opportunity to get the message out to business leaders and entrepreneurs everywhere: Pennsylvania is an even better place to do business because of these tax reforms championed by Gov. Tom Wolf, the PA Chamber, and our other partners.”
The tax package also includes relief for small businesses that the PA Chamber has long sought for its members, affording businesses the opportunity to defer personal income tax liabilities through “like-kind exchanges” of certain property. This provision allows employers to invest in the job-creating assets businesses need to stay competitive. Previously, Pennsylvania was the only state in the country that did not offer this type of deferral. An additional component of the package aligns the state Tax Code with federal tax law by allowing small businesses to deduct qualifying equipment purchases from personal income tax liabilities, just as federal tax law provides for under Section 179. This change makes it easier for employers to buy equipment and invest, which in turn promotes job growth.
“We appreciate the efforts of our Lehigh Valley legislators in helping pass this bipartisan bill, which will ultimately benefit all businesses and residents of the state,” LVEDC President & CEO Don Cunningham said. “Reducing the corporate net income tax will have a positive effect on our efforts to attract more businesses to locate and expand in the Lehigh Valley and throughout Pennsylvania.”
These important updates to the state’s tax structure will improve Pennsylvania’s competitiveness by bringing the Commonwealth in line with other states and federal tax law and leveling the playing field for entrepreneurs looking to start a business here.
The Pennsylvania Chamber of Business and Industry is the state’s largest broad-based business association, with its statewide membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of BusinessTM.