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Return to 2008 News Room
Senate approves Sen. Regola’s tax relief bill
Would expand tax forgiveness for low-income,
The Senate today approved legislation introduced by Senator Bob Regola (R-39) that would provide essential tax relief to lower-income working Pennsylvanians. Senate Bill 1386, sponsored by Senator Regola would increase the eligibility limits for the Personal Income Tax (PIT) Special Tax Forgiveness Program for lower-income working families. The bill 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. Currently, a family of four with a combined income of less than $32,000 pays no state income tax. Under SB 1386, families earning $37,000 or less would be exempt. This would project up to $74.6 million in savings in year three when the legislation would be fully-phased in. “With gas at $4 a gallon and food costs skyrocketing, it is essential that we provide tax relief for lower-income working families,” said Sen. Regola. “Raising the limits on our tax forgiveness program will provide true tax relief to those Pennsylvanians who need it the most. I am pleased that the Senate quickly approved this bill and I hope the House will do likewise since there has not been an increase in the base amount of the program since 1998 and the dependent allowance has not been increased since 2003, which ironically was the same year that Governor Rendell imposed his 10 percent personal income tax increase on all Pennsylvanians. In 2005, 1.3 million families benefited from the Special Tax Provision for Poverty Program. In the first tax year under SB 1386, the Department of Revenue estimates that 297,100 families would benefit from the legislation. Senator Regola’s bill is part of a four-bill Senate Republican Caucus tax-cut stimulus package. The other measures, which were also approved by the Senate today, 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, $68.4 million in Fiscal Year 2009-10, and $78.2 million in Fiscal Year 2010-11. 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. Most corporations that conduct business in more than one state are required to use a three-factor apportionment in order to apportion their business income among the states where they have activity. The three-factor apportionment formula consists of property, payroll and sales factors. As things stand, Pennsylvania companies continue to be penalized by increased taxes when they hire new employees or make capital investments in the Commonwealth. Currently, the sales factor accounts for 70 percent of the apportionment formula, and the property and payroll factors each account for 15 percent. The tax cut package now heads to the House of Representatives for further consideration. ### Contact: Nathan Silcox (717) 787-6063
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