January 31, 2022
State House Approves Tax Legislation
Tax proposals passed the Pennsylvania State House on January 25, 2022, to conform to the federal Internal Revenue Code by matching state law to federal law. All the bills now go to the Senate for consideration.
The bills approved by the House would allow for the following:
- Owners to account for the percentage depletion of mines, oil and gas wells, and other natural deposits when filing their Pennsylvania personal income tax (House Bill 199);
- Permits the deferral of taxation on a lump-sum distribution from employee stock ownership plans (House Bill 285);
- Increase the amount small businesses can deduct for the depreciation of machinery and equipment from $25,000 to $1.05 million (House Bill 333). All three bills now go to the Senate for consideration.
Other house bills 1059 and 324 are pending in the Senate Finance Committee:
The House also approved House Bill 1059, which would phase in a schedule for increasing the threshold for making required quarterly estimated personal income tax payments from $8,000 to $20,000 in 2027, with an annual increase of $500 thereafter.
House Bill 324, also approved by the House, amends the First Class City Business Tax Reform Act so that net operating losses incurred in another tax period may be carried over for 20 tax years following the year it was incurred in a city of the first class. The only first-class city in Pennsylvania is Philadelphia.
Unfortunately, the other bills that did not make it to a final vote are permitting tax deferrals for certain like-kind exchanges and (House Bill 105) which could provide for net losses incurred by corporations in Pennsylvania to be aligned with federal law (House Bill 1960).
The House and Senate will return to session the week of Feb. 7. Gov. Stay tuned.
Our CPAs are available, and we have the knowledge, skill, and information that you need right now to address your financial needs impacted by the Infrastructure Investment and Jobs Act. Contact us today.
Maria is a Partner at Wilke & Associates, serving closely-held businesses in manufacturing, real estate, transportation/logistics, technology industries, and high net worth individuals and executives in delivering effective tax strategies.