Pennsylvania resident partners subject to pass-through entity taxes (PTET) in other states may face double taxation due to the denial of a Pennsylvania resident tax credit. This issue arises even though the taxes paid through PTET to other states are equivalent to those which would otherwise be paid directly by Pennsylvania residents to those other states. The Pennsylvania Department of Revenue (DOR) has stated that resident partners are not entitled to a credit against personal income tax for PTET paid to other states. However, this stance differs from the DOR’s position on resident S corporation shareholders, who are eligible for a similar credit against their personal income tax. My legislative would extend equivalent credits to resident partners and S corporation shareholders, addressing this inequity and mitigating the risk of double taxation.

Statutes/Laws affected:
Printer's No. 1732 (May 21, 2025): P.L.6, No.2