The 2022-2023 state spending plan includes H.B. 1342 (Rader, R-Monroe), which is an omnibus bill amending the Tax Reform Code of 1971. The bill includes a much-anticipated reduction to the state's Corporate Net Income Tax as well as amendments to other provisions of the code.
As amended, the bill would:
- Ensure that the Sales and Use Tax is imposed on "peer-to-peer" car sharing programs, and collected and remitted by "peer-to-peer car sharing program marketplace facilitators. Vehicles rented through such programs will be excluded from the vehicle rental tax, but subject to a pro-rated Public Transportation Assistance Fund (PTAF) fee.
- Makes amendments to the Tax Code so that the treatment of expense deductions under the Personal Income Tax will conform to federal law.
- Addresses taxation of payroll protection loan forgiveness and local tax deadline changes made during the COVID-19 pandemic
- Modifies the sales factor used for apportioning income of mulit-state corporations related to the sale of "intangible property" such as receipts from patents, royalties, and sales of securities.
- Codifies Department of Revenue rules regarding "economic nexus" rules for out of state corporations doing business in Pennsylvania (raised in the Wayfair v. South Dakota case).
- Provides for a phase down of the Corporate Net Income Tax. The tax is reduced one point in the first year and one half a percentage point each year thereafter until it reaches 4.99% in 2031.
- Transfers certain insurance premiums taxes and charges to the Fire Insurance Tax Fund and the Municipal Pension Aid Fund such that those funds are stabilized and modernizes the related provisions.
- Increases the limitations on the following tax credits, which
will remain in place until the 2024-2025 fiscal year:
- Research and Development Tax Credit is increased from $55 million to $60 million.
- Film Production Tax Credit is increased from $70 million to $100 million and includes a $5million set-aside for Pennsylvania film producers.
- Entertainment Economic Enhancement Program Tax Credit is increased from $8 million to $24 million.
- Waterfront Development Tax Credit is increased from $1.5 million to $5 million.
- Creates a new Child and Dependent Care Enhancement Program-a tax applied against PIT for employment-related expenses incurred for depending care costs while seeking employment or working.
- Establishes the Airport Land Development Zone program to promote economic development on land owned by small airports in Pennsylvania.
- Makes clarifying amendments to the CRIZ, NIZ and KOZ programs, including extending the application deadline for new KOEZ's from October 2021 to October 2023.
- Extends the qualification period for participants in the Computer Data Center Tax Exemption Program from 15 to 25 years.
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