The state Senate Finance Committee recently advanced legislation that would expand the 21st Century Manufacturing Innovation and Reinvestment Deduction Act.
Under the current Manufacturing Innovation and Reinvestments Deduction program, manufacturers that make capital investments of more than $60 million can receive a pro-rated deduction against their taxable income for a period of 10 years upon the completion of the capital project.
The deduction is not a tax credit and cannot be used to reduce the manufacturer’s tax liability by more than 50 percent. It is non-deferrable and non-transferable to another entity.
There are two tiers in the tax code. The first tier is for investments between $60 million and 100 million, while the second tier is for investments greater than $100 million.
Senate Bill 288 would add two additional tiers. The first would be for investments between $1 million and 10 million, while the second tier would be between $10 million and $60 million.
Language in the bill also clarifies when deductions take place.
“Large manufacturers throughout the state, several of them in my area, employ thousands of people and have utilized this program to make investments well over $100 million to make capital improvements and continue to invest in the Pennsylvania workforce,” state Sen. Bob Mensch (R-Berks, Bucks and Montgomery counties), who sponsored the bill, said.