The Pennsylvania Senate on June 25 approved a sweeping package of tax changes aimed at reducing costs for consumers while rejecting proposed amendments that business groups argued would have increased taxes on employers by more than $1 billion.
House Bill 1667, an omnibus tax measure, now includes provisions that Senate Republican leaders say would deliver the largest tax cut in Pennsylvania history by eliminating the gross receipts tax on electric bills, creating a two-week sales tax holiday for school supplies, expanding the Educational Improvement Tax Credit (EITC) program, and eliminating the state’s sales tax exemption for data centers. The legislation now heads to the State House of Representatives for consideration.
During Senate consideration of the bill, lawmakers also tabled two amendments offered by Senate Democrats that would have created a new 5 percent gross receipts tax on digital advertising and implemented mandatory unitary combined reporting for Pennsylvania’s Corporate Net Income Tax.
The Pennsylvania Chamber of Business and Industry praised the Senate’s decision to block the amendments.
“We appreciate Senate Republicans standing up for Pennsylvania’s business community and our state’s competitiveness by rejecting this tone-deaf effort to increase costs and complexity for job creators and consumers who are already navigating significant affordability challenges,” PA Chamber Senior Vice President of Public Affairs Jon Anzur said.
According to the chamber, the proposed digital advertising tax would have imposed a new tax on digital advertising revenue in Pennsylvania. While supporters described it as targeting large technology companies, the chamber argued the costs would likely have been passed on to small businesses and consumers.
The chamber also opposed the mandatory unitary combined reporting proposal, saying it would impose an estimated $1 billion in new taxes on Pennsylvania businesses, reduce the state’s competitiveness, increase compliance costs and administrative complexity, and create greater uncertainty for employers.
The organization said Pennsylvania should continue building on recent bipartisan tax reforms that encourage investment, support job creation, and strengthen the state’s business climate.
Meanwhile, Senate Republican leaders highlighted the provisions that remain in the amended legislation.
“Senate Republicans continue to deliver for Pennsylvania families by passing the largest tax cut in the history of our commonwealth, which will provide immediate relief to Pennsylvania ratepayers by eliminating the gross receipts tax on electric bills and save consumers money,” said State Senate President Pro Tempore Kim Ward (R-39). “We encourage House Democrats to take up this bill immediately.”
The legislation would eliminate the gross receipts tax on electric bills and require utilities to pass the savings on to customers, a change Senate Republicans said would save ratepayers more than $1.7 billion during the first year.
The bill also would establish a two-week sales tax holiday in August for school supplies, including book bags, crayons, textbooks, and tablets.
“Affordability remains a concern for people in every community and addressing that challenge head-on is essential to strengthening the economic stability and well-being of our residents,” said Senate Majority Leader Joe Pittman (R-41). “With passage of this legislation, we are supporting families, empowering parents, and taking a significant step forward to help ease the financial pressures that so many households are facing.”
Additionally, the measure would provide an additional $25 million for the EITC program, increasing total funding to $705 million, and would eliminate the existing sales tax exemption for data centers, a provision Senate leaders said responds to concerns raised across the state.
“Today’s vote delivers real, immediate relief to Pennsylvania families and protects students from the drastic, politically motivated measures taken by the House of Representatives,” said Senate Majority Whip Wayne Langerholc (R-35).