Greiner Bill Aims to Keep, Attract Businesses in Pennsylvania

HARRISBURG - Rep. Keith J. Greiner (R-Lancaster) recently introduced House Bill 1703, which would increase the state cap on state and local tax (SALT) deductions for business owners in pass-through entities such as "S" corporations and partnerships. Congress passed the "Big Beautiful Bill," which increased the SALT cap deductions for individuals from $10,000 to $40,000 and locked it in for the next five years. The benefit gradually decreases after $500,000 of income. Without further congressional action, the cap will revert to $10,000 at the end of 2030. "Small business partnerships and "S" corporations in Pennsylvania have been hamstrung by the lower cap on deductions, despite guidance provided by the Internal Revenue Service (IRS) in 2020 that effectively endorsed state-level workarounds to federal limits," Greiner said. "Since then, 36 of the 41 states that impose personal income taxes have adopted workarounds that allow state-level business income taxes on pass-through entities to be paid at the entity level, instead of the individual level. In an environment where we must encourage job creation, Pennsylvania's small businesses have been at a competitive disadvantage as compared to neighboring states." "Last session, I worked across the aisle with my Democratic counterpart, and current PA state Sen. Nick Pisciottano, to establish a workaround for Pennsylvania businesses that would allow higher caps on deductions. When it failed to pass, I was determined to reintroduce the bill this session," said Greiner. At a House Appropriations budget hearing in February, Greiner questioned officials of the Pennsylvania Department of Revenue about a workaround for the Commonwealth. At the time, Greiner was urged to hold off introducing his legislation to see what changes would occur at the federal level, since Congress had to act on various income tax issues, including the SALT deduction. Now that the federal government has acted to continue what has been in current federal tax law, and increased limits for individuals for the next five years, it makes even more sense that Greiner's bill should become law. Greiner emphasized that House Bill 1703 is revenue-neutral to the Commonwealth, meaning it will have no impact on revenue collected and, therefore, no impact on the state budget, to which Department of Revenue officials agreed. Representative Keith J. Greiner, CPA 43rd Legislative District Pennsylvania House of Representatives Media Contact: Donna Pinkham 717.260.6452 dpinkham@pahousegop.com RepGreiner.com / Facebook.com/RepGreiner

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