On Thursday, Pennsylvania Sens. Ryan Aument (R-36), Tracy Pennycuick (R-24), Greg Rothman (R-34), and Judy Ward (R-30) introduced a package of tax reform bills.
The bills, designed to stimulate economic growth and attract businesses, would drop the Corporate Net Income (CNI) tax to less than 5 percent by 2026.
“A more competitive business tax code offers far more benefits than simply improving the state’s business climate. Studies have shown that decreasing the CNI leads to better job opportunities, higher workers’ wages, and improved communities – all of which create family-sustaining jobs and attract and retain new talent,” the senators said.
Specifically, the bills would reduce the CNI from 9.99 percent to 7.99 percent immediately and then drop it another percentage point in January of every year until it reaches 4.99 percent. The 2022-2023 state budget included a provision that dropped the CNI over nine years. The latest bill would drop it in four years.
The bills would also increase the Net Operating Loss (NOL) carryover limitation and allow small employers to use the NOL deduction. The legislators said increasing the NOL carryover limit from 40 percent to 80 percent over the next four years would bring family-sustaining jobs into the state while growing existing Pennsylvania businesses. Additionally, increasing the NOL carryover limit would align the provision with other state and federal limitations.
“The current restriction hurts Pennsylvania job creators and turns away businesses that might otherwise choose to locate in our state. For Pennsylvania to compete nationally and attract new businesses, we must address this anti-growth policy,” the senators said.
Allowing small businesses to use the NOL deduction would give them greater control over their financial position, the legislators said.
The bills will be forwarded to the Senate Finance Committee for consideration.