The New Pennsylvania Corporate Tax Cuts
July 26, 2022
With rare bipartisan support, Governor Tom Wolf signed a bill to make a massive change to the Pennsylvania corporate tax rates. Pennsylvania’s corporate net income tax rate is set to drop from 9.99% to 8.99% on January 1, 2023. The current rate of 9.99% is the third highest state corporate tax rate in the country, which made it difficult for Pennsylvania to attract corporations to set up infrastructure in the state. While a drop to 8.99% alone would be a significant decrease – falling to sixth overall – it doesn’t stop there. The Pennsylvania corporate net income tax is now set to shave off half a percentage point every year until it bottoms out at 4.99% in 2031. This would put Pennsylvania at the 14th lowest corporate tax rate in the country. Even if you do not own a company, the decrease in PA corporate tax rates is a reason for PA residents to celebrate, as it should make Pennsylvania more competitive with other states.
These new corporate rates present significant opportunities for existing corporations and entrepreneurs looking to start a business. Corporations are subject to state corporate taxes based on their activity in that state. The gradual lowering of Pennsylvania tax rates creates a strong argument for increasing a corporation’s activity in the Commonwealth either by shifting operations from another state or by creating new infrastructure in Pennsylvania. The economic benefits cannot be overstated. While starting a new business or moving existing operations can be daunting, the right help and expertise can make the experience more than worthwhile. Rothman Gordon can guide you through incorporation, corporate dealings, and tax planning and help get you the most out of your Pennsylvania operations. If you have any questions, contact us online or call (412) 338-1100.