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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session


Posted: June 7, 2018 12:20 PM
From: Senator Randy Vulakovich
To: All Senate members
Subject: Small Business Tax Reform
In the near future, I will introduce legislation to reform how Small Businesses will be able to deduct investments in their companies the same way larger businesses can now.

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased during the tax year, up to $500,000. The deduction is phased out if the total amount of equipment purchased is over $2,000,000. This provision was made permanent at the federal level in 2015.

Currently, at least 33 other states allow the same limit under their state tax code.

Pennsylvania C-corporations are able to utilize the full $500,000 deduction allowed under the IRS tax code. However, for personal income tax purposes (S Corporations, partnerships, limited liability companies, and individuals), Pennsylvania law limits the amount of Section 179 deduction to $25,000. Pennsylvania is unique in being the only state that allows for full Section 179 expensing for larger businesses while not allowing small businesses to do the same.

This has created an inequity for small businesses in Pennsylvania. My legislation would close this loophole by allowing small businesses in Pennsylvania to take the full 179 deduction currently allowed under the IRS tax code.

Should you have any questions, please contact my office at 717-787-6538.