Soon we plan to reintroduce legislation that will help our Commonwealth’s small businesses by allowing them to use the Net Operating Loss deduction. This was Senate Bill 662 of the 2023-24 session.
 
The option of using various tax strategies is critical to small businesses, as they lack the ability of large business enterprises to access capital. The use of tax strategies gives these small businesses greater control over their financial positions.  For example, if an owner sells some personal items to help the business make payroll, that owner can take the business loss against his or her tax bill created by selling the personal items.
 
The Tax Reform Code of 1971 allows corporate taxpayers to deduct Pennsylvania losses in one year from Pennsylvania income in subsequent years, with limitations on the length of the carry forward period and the amount that is allowed to be carried.

This legislation gives our small business owners this accounting tool, which is currently available to their large, corporate counterparts, and thus helps to create parity and fairness between these two groups. Our small businesses are the backbone of our economy, and they should be allowed the same tax advantages as large businesses.

Co-sponsors of Senate Bill 662 were Senators Argall, Bartolotta, Brooks, Dush, Gebhard, Hutchinson, Pennycuick, Phillips-Hill and Stefano. Please join us in co-sponsoring this important legislation.

Statutes/Laws affected:
Printer's No. 737 (May 05, 2025): P.L.6, No.2