Rep. Kail to introduce bill designed to spur economic recovery

State Rep. Josh Kail (R-Beaver) plans to introduce a bill designed to spur business growth and investment in Pennsylvania.

Specifically, Kail is looking to increase the corporate net loss deduction limitation, thus aligning the treatment of net losses incurred by corporations with federal law. This would help the Pennsylvania economy rebound from the impacts of the global health pandemic, Kail said in a House cosponsorship memoranda.

Currently, Pennsylvania allows taxpayers who are subject to Corporate Net Income Tax (CNIT) to “carry-forward” a net loss and apply it as a deduction against taxable income in subsequent taxable years. Current law imposes a limitation that the deduction may not offset more than 40 percent of taxable income for the subsequent taxable year. This differs significantly from the federal rules which allows a taxpayer to apply a net loss as a deduction against up to 80 percent of taxable income.

“While economic uncertainty abounds as the nation continues to navigate the unprecedented challenges that have arisen due to the global health pandemic, it is critical that the Commonwealth develop and implement policies to make Pennsylvania a favorable place for businesses to locate, invest, and grow,” Kail said.

“My legislation would help achieve this goal by incrementally increasing the limitation for the net loss deduction by 10 percent annually until the limitation reaches 80 percent of taxable income for taxable years beginning after December 31, 2024,” he added.