Pennsylvania – House passes bill proposing income tax rate reduction, intangible expense addback, and market-based sourcing

On May 6, 2013, the Pennsylvania House of Representatives passed H.B. 440, which would make several significant changes to the state’s Corporate Net Income (CNI) tax. The changes include: (1) phasing in a 10-year rate reduction from the 9.9% current rate to a 6.99% rate; (2) adopting an addback for intangible expenses paid to an affiliate; (3) implementing market-based sourcing for the sale of services; and (4) increasing the cap on the net loss deduction. Pennsylvania taxpayers should be aware of the potential support that the bill has with the governor and with the state Senate.

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