In the near future, I plan on reintroducing legislation, formerly SB 161 of the 2023-24 session, that follows the lead of over 30 other states in helping to close corporate tax loopholes. Specifically, the Delaware Loophole provides an unfair advantage for certain corporations that are out of state but conduct business in Pennsylvania. Closing this loophole would enhance tax fairness for businesses that conduct business within the Commonwealth.

This legislation implements combined reporting to require state tax returns to be filed consistent with federal returns to recover lost revenue. Furthermore, this legislation combats the offshoring of wealth in foreign tax havens by corporations seeking to avoid fair taxation. In order to put these recovered revenues to use by spurring investment in the Commonwealth, previous versions of this legislation also proposed a reduction in the Corporate Net Income tax rate (CNIT). However, with the General Assembly approving a reduction in the CNIT from 9.99% to 4.99% by 2031 last session, it is now even more imperative to ensure corporations are paying their fair share to Pennsylvania under the new CNIT framework.

Closing the loophole would help ease the tax burden for all Pennsylvania businesses, especially those which are newly established or struggling to remain open, while also increasing revenue to the state. I believe this will ultimately help to bring greater economic stability and prosperity to Pennsylvania.

I invite you to co-sponsor this important legislation.

Members who co-sponsored this legislation previously include Senators Haywood, Hughes, Kearney, Fontana, Kane, Collett, Street, Cappelletti, Santarsiero, and Comitta.
 

Statutes/Laws affected:
Printer's No. 695 (Apr 28, 2025): P.L.6, No.2