For Immediate Release
6/26/08
 

Finance Committee Again Approves Tax Stimulus Package

Would provide $96 million in relief for FY 2008-09

The Senate Finance Committee today approved an amended House Bill that would provide nearly $96 million in tax relief in the upcoming fiscal year for lower-income working Pennsylvanians, small businesses looking to expand, as well as major employers and job creators, according to Committee Chairman Senator Pat Browne (R-16).

"The amendment we approved today reinforces our commitment to the tax stimulus package that was developed by the Senate Republican Caucus," Senator Browne said. "We strongly believe that this proposal should be on the table as we finalize next year's budget. It is essential that the Commonwealth take steps to protect jobs and provide economic relief for lower-income working Pennsylvanians."

House Bill 377 as approved by the Finance Committee includes the following provisions:

• An expansion of the cap on the Net Operating Loss provision of the Corporate Net Income Tax to $5 million or 20 percent of taxable income. The NOL cap is currently set at $3 million or 12.5 percent of taxable income. If enacted, the effective date of the increase would be January 1, 2009. The NOL expansion is projected to save Pennsylvania employers $21.5 million in Fiscal Year 2008-09, $68.4 million in Fiscal Year 2009-10, and $78.2 million in Fiscal Year 2010-11.
• An expansion of the special tax forgiveness program for low-income Pennsylvanians. By increasing claimant income eligibility limits by a total of $2,000 over three years and the dependent allowance by $500 over the same period.  Currently, a family of four with a combined income of less than $32,000 pays no state income tax. Under SB 1386, families earning $37,000 or less would be exempt. That increase is projected to provide $74.6 million annually in savings to low-income working Pennsylvanians.
• An increase of the cap on the amount that small businesses may deduct as Section 179 expenses annual deduction to $50,000, which is projected to provide $6.6 million in savings to Pennsylvania's small businesses. Section 179 of the federal Internal Revenue Code provides for the deduction of all or part of the costs of machinery and equipment used for business purposes.
• An expansion of the sales factor under Pennsylvania's Corporate Net Income Tax to 85 percent.  Most corporations that conduct business in more than one state are required to use a three-factor apportionment in order to apportion their business income among the states where they have activity. 

Contact:

Stacey Connors
 (717) 787-1349

Additional Information:
Tax Relief

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