The PA Chamber helped achieve significant pro-business reforms in the FY 2024-25 budget enacted earlier this month. The On the Hill section of our website reflects how these victories will benefit the Commonwealth’s economic future.

 

TAX REFORM: Perhaps our greatest member-driven win this budget cycle was our successful advocacy in eliminating Pennsylvania’s start-up tax by improving the tax treatment of Net Operating Losses (NOLs) going forward. Federal and state tax laws allow employers to carry forward losses from previous years to offset tax liability, which can be particularly critical to startups who need capital in their early years to invest in their operation and people.

Net Operating Loss Reform

Specifically, Pennsylvania employers can deduct only up to 40 percent of their taxable income using NOLs, the lowest cap in the nation. Through legislation passed as part of the new state budget, however, the deduction cap will be gradually increased for NOLs generated in the 2025 tax year (and beyond) until it reaches parity with the federal rules (80 percent) in the year 2029. This will bring PA in line with other states, making us far more competitive to companies considering Pennsylvania as a place to invest and create jobs.

Continuing the CNI Phasedown

The budget also continues the phasedown of the Corporate Net Income (CNI) Tax, which will be further reduced from the current 8.49 percent rate to 7.99 percent in 2025.

The PA Chamber led the effort to pass Act 53 of 2022, which included a historic reduction of Pennsylvania’s exceedingly high CNI of 9.99 percent. Currently at 8.49 percent, PA’s CNI is set to be phased down gradually each year until the rate reaches 4.99 percent in 2031.

 

The PA Chamber also made tremendous progress on PERMITTING REFORM, another top priority, thanks to partnering with state lawmakers, Gov. Shapiro, industry leaders, the building trades, and other bipartisan advocates. Those reforms include:

• The new Streamlining Permits for Economic Expansion and Development (SPEED) Program, which makes several key improvements to state permitting processes for key PA Department of Environmental Protection permits that will reduce delays in development and business expansion projects, including:
• Allowing employers to work with third-party professionals to facilitate permit application reviews.
• Establishing timeframes with clear accountability measures for permit responses.
• Implementing measures for easier and more transparent tracking of permit applications.

These changes will help modernize the permitting process, further encourage investment and job creation, and help ensure that the newly authorized funding for the PA Strategic Investments to Enhance Sites (SITES) Program successfully prepares business sites for development.

 

Regarding WORKFORCE, our Government Affairs team worked with a bipartisan group of lawmakers to support initiatives that will encourage more people into the workforce and help develop the next generation of skilled, inspired workers in Pennsylvania. This year’s budget advances several key workforce development initiatives, including:

• Increasing the Commonwealth’s investment in career and technical education (CTE) and making it easier for qualified individuals from the private sector to become CTE educators.
• Incentivizing employers to reimburse employees for childcare expenses.
• Creating scholarships for students who enter in-demand fields and stay in the Commonwealth.
• Increasing the Pennsylvania Housing Affordability and Rehabilitation Enhancement (PHARE) fund to expand the availability of workforce housing in Pennsylvania.
• Increasing transportation funding to help Pennsylvanians get to work.

For more information about these important business issues, click here to visit our website.