Small Business Tax Reform Bills Clear Committee Hurdle
From PA Chamber of Business & Industry
The PA House Finance Committee voted last week to advance three bills that would help small businesses in the Commonwealth compete on an even playing field.
House Bill 331 would bring the state’s Tax Code in line with federal law to allow for a tax deferral of a “like kind exchange” which is the disposal of an asset and the acquisition of a replacement asset without generating a current tax liability from the sale of the first asset – a tax strategy that operates in every state but Pennsylvania.
House Bill 332 would allow small businesses to use the Net Operating Loss deduction, helping those that pay the personal income tax to offset prior year financial losses with future year gains.
Lastly, H.B. 333 would bring the state’s Tax Code in line with the Internal Revenue Code and more than 30 other states to allow small businesses in Pennsylvania to take the full deduction for the purchase of qualifying equipment. Currently, Pennsylvania C-corporations are able to utilize the full $500,000 deduction allowed under the IRC; but companies filing personal income tax are limited to an amount of $25,000. Again, this makes Pennsylvania regrettably unique as the only state that allows for full equipment purchase expensing for larger businesses while disallowing smaller businesses to take advantage of the same deduction level. The PA Chamber sent a memo to the committee in advance of the meeting that urged a “yes” vote on all three bills.
House Bills 331, 332 and 333 now await further consideration by the full House.