Senate Approves Tax Stimulus Package

HARRISBURG – The Senate approved four bills Monday that would provide nearly $96 million in tax relief in the upcoming fiscal year for lower-income working Pennsylvanians and businesses, according to Sen. Chuck McIlhinney (R-10).

McIlhinney said that the package of tax cuts would provide a boost to the state's economy and create jobs for Pennsylvanians.

"This package will provide relief for working families and provide more family-sustaining jobs in our communities," McIlhinney said. "It is important to help the vast number of families that are struggling due to the weak economy and a tough job market."

Senate Bill 1386 would help lower-income workers by increasing the eligibility limits for tax forgiveness. 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 from paying state income taxes. This increase is projected to provide $74.6 million annually in savings to low-income working Pennsylvanians.

The package also includes several tax cuts to job creators and small businesses that are looking to expand, McIlhinney said.

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 on their income tax filings for the costs of machinery and equipment used for business purposes. The bill 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 law for businesses that have sales in multiple states. Corporations that conduct business in more than one state are required to apportion their business income among the states where they have activity. Currently, the sales factor accounts for 70 percent of the apportionment formula. The legislation would expand the sales factor to 85 percent. The change is expected to help stimulate manufacturing jobs in Pennsylvania, McIlhinney said.

The tax cut package now goes to the House of Representatives for consideration.

Contact:

Heather Cevasco
(215) 489.5000