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Pennsylvania State Senate
04/25/2024 01:54 PM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20210&cosponId=36882
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Senate Co-Sponsorship Memoranda

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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: February 17, 2022 09:48 AM
From: Senator Steven J. Santarsiero
To: All Senate members
Subject: CNI Reduction and Modernization
 
In the near future, I plan to introduce legislation to make the business climate in Pennsylvania more competitive by lowering the Corporate Net Income Tax (CNIT) rate, while also strengthening the corporate tax system to increase fairness and equity for Pennsylvania businesses.
 
The advent of a budget surplus coupled with strong revenue collections and steady fiscal standing has created an opportunity to modernize the commonwealth’s corporate tax system. As part of the Governor’s 2022-23 budget proposal for supporting businesses and strategic workforce investment, this bill will reform the corporate tax structure in a few distinct ways.
 
Specifically, this legislation will:
  • Cut the CNIT rate by 2 percent from 9.99% to 7.99% beginning January 1, 2023. The CNIT rate will be further reduced to 6.99% in 2026, 5.99% in 2027. These reductions will result in tax cuts of nearly $1.3 billion over five years. The proposal ultimately puts Pennsylvania on a path to 4.99% in the future.
  • Increase fairness and equity by strengthening the commonwealth’s addback provisions by adding intercompany management fees, royalties, and interest, which are currently unaccounted for.
  • Codify economic nexus rules, as described in the Department of Revenue’s Corporation Tax Bulletin 2019-04, that require out-of-state businesses operating in the commonwealth must be subject to the same rules as Pennsylvania-based businesses.
  • Lastly, the legislation seeks to align current sourcing rules for the sales of intangibles to those used for services.
 
Collectively, these changes will improve the competitiveness of tens of thousands of Pennsylvania-based corporations, and strengthen Pennsylvania’s ability to attract new businesses to the state.
 
Please join me in cosponsoring this important legislation to modernize the commonwealth’s corporate tax system and level the playing field for our Pennsylvania based businesses.
 

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Introduced as SB1077