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“Pennsylvania Budget’s Eye-Opening Tax Changes (And Omissions)” in Tax Notes

September 5, 2022

Jennifer Karpchuk article on “Pennsylvania Budget’s Eye-Opening Tax Changes (And Omissions)”

Tax Notes

In an article published in Tax Notes on September 5, 2022, Philadelphia-based Shareholder Jennifer Karpchuk analyzes the corporate net income tax amendments to the Pennsylvania tax code regarding future scheduled rate changes, the economic nexus factor-presence sales threshold, and the receipts sourcing for sales of specific intangibles.

Karpchuk’s article discusses how the corporate net income tax (CNIT) rate has been 9.99% for 22 years, with Pennsylvania being consistently ranked among the states with the highest corporate income tax rates. H.B. 1342 will become effective for tax years after December 31, 2022, reducing the CNIT rate from 9.99% to 8.99% for tax year 2023. She explains in detail how business activities are now codified to establish substantial nexus with Pennsylvania. According to Karpchuk, it is yet to be determined whether this administratively implemented nexus standard will apply to tax years before 2023.

“H.B. 1342 produced some of the most significant changes to Pennsylvania’s Tax Reform Code in recent years,” Karpchuk explains. “However, some provisions covered here remain open to being revisited in the near future. Taxpayers with operations in Pennsylvania should consider how these sweeping changes affect their current tax liabilities in the state and continue to stay vigilant in monitoring future developments.”

To read the article in full, subscribers may click here.