Business Tax Benefits in 2022-23 PA State Budget

September 11, 2022 10:42 PM | Rebecca Oyler (Administrator)

The 2022-23 budget deal that passed in Harrisburg this past summer contains significant benefits for Pennsylvania’s business community. PMTA members may benefit from the tax changes that take effect in 2023, including:

  • A reduction in the Corporate Net Income Tax rate. Pennsylvania’s current 9.99% CNI is the highest flat rate in the country, putting its corporations at a significant competitive disadvantage. Starting on January 1, 2023, it will be reduced to 8.99%, with automatic annual .50 percentage point reductions until the rate reaches 4.99% in 2031, when it will be the 8th lowest in the country. This is the first time Pennsylvania’s CNI has changed since 1995.

With 97% of trucking companies being small businesses, it’s important that there are benefits for small businesses coming next year too. The following tax benefits will help Pennsylvania businesses that are subject to the Personal Income Tax rate:

  • Like-Kind Exchanges. Starting in 2023, businesses may dispose of one asset and acquire another without generating a tax liability from the sale of the first asset. Pennsylvania was the only state in the country that didn’t allow for this tax deferral at the state level.
  • Tax Deduction for Qualifying Equipment Purchases. Section 179 of the Federal tax code allows owners of pass-through businesses to write off the entire depreciation of purchased qualifying equipment during the initial tax year, effectively reducing the cost by lowering tax liability. Pennsylvania law limited these deductions to $25,000 for businesses subject to the state's personal income tax. In 2023, the deduction limit will increase to be consistent with the federal limit, providing equity for small businesses.

Businesses equipment that qualifies for Section 179 is almost any asset with a useful life beyond one year. Vehicles have a complicated set of exceptions, however, vehicles intended for business, such as semi-trucks, dump trucks, and forklifts are fully eligible for the deduction.

To determine how these state tax changes may impact you, contact your tax professional.



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