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Finance Committee Approves Regola’s Tax Relief Bill

Would expand tax forgiveness for low-income, working Pennsylvanians

The State Senate Finance Committee today approved legislation introduced by Senator Bob Regola (R-39) that would provide tax relief to lower-income working Pennsylvanians.

Senate Bill 1386 would increase the eligibility limits for the Personal Income Tax Special Tax Forgiveness Program for low-income Pennsylvanians.  

Currently, a family of four with a combined income of less than $32,000 pays no state income tax.  SB 1386 would increase claimant income eligibility limits by a total of $2,000 over three years and the dependent allowance by $500 over the same period.  As such, under SB 1386, families earning $37,000 or less would be exempt paying the state income tax.  Overall, SB 1386 is expected to provide $74.6 million annually in savings to low-income working Pennsylvanians.

“I am pleased that the Finance Committee approved this bill and I hope the Senate will act just as quickly to move it on to the House,” said Sen. Regola.  “There has not been an increase in the base amount since 1998 and the dependent allowance has not been increased since 2003, the same year that Governor Rendell imposed his 10 percent personal income tax increase.  With rising energy and food costs, lower-income working families are struggling to make ends meet.  Raising the ceiling on tax forgiveness would provide true tax relief to those Pennsylvanians who need it the most.”

Senator Regola’s bill is part of a four-bill tax cut stimulus package that would provide nearly $96 million in tax relief.  The Finance Committee approved all four bills today.  The other measures, cosponsored by Senator Regola, include:

Senate Bill 1385 would expand the cap on the Net Operating Loss provision of the Corporate Net Income Tax to $5 million or 20 percent of taxable income.  The NOL cap is currently set at $3 million or 12.5 percent of taxable income. The NOL expansion is projected to save Pennsylvania employers $21.5 million in Fiscal Year 2008-09.

“Pennsylvania is one of only two states that prohibit companies from carrying forward the full extent of their losses,” said Sen. Regola, who is the prime sponsor of Special Session Senate Bill 43 which would lift the cap on the NOL carryover.  “This penalizes companies by significantly increasing their tax rates.  By increasing the NOL cap, we provide an incentive for businesses to invest in new and improved technology to achieve energy savings.”

Senate Bill 1387 would double the amount that small businesses may deduct as Section 179 expenses on their income tax filings.  Section 179 of the federal Internal Revenue Code provides for the deduction of all or part of the costs of machinery and equipment used for business purposes.  SB 1387 would increase the maximum annual deduction to $50,000, which is projected to provide $6.6 million in savings to Pennsylvania’s small businesses.

Senate Bill 1388 would amend Pennsylvania’s Corporate Net Income Tax to expand the sales factor to 85 percent.  Currently, the sales factor accounts for 70 percent of the apportionment formula, and the property and payroll factors each account for 15 percent.

The four-bill tax cut stimulus package will now proceed to the Senate Appropriations Committee for further consideration.

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Contact:  Nathan Silcox (717) 787-6063