2025-2026 Estimate Documentation PDF Free Download
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DOP-12 02-25
BUREAU OF
RESEARCH
FEBRUARY
2025
ESTIMATE2025 – 2026
DOCUMENTATION
Patrick M. Browne, Secretary of RevenueJosh Shapiro, Governor
ESTIMATE DOCUMENTATION
TABLE OF CONTENTS
Page
Economic Overview.............................................................................. 1
Methodology Overview........................................................................ 5
General Fund Overview........................................................................ 6
FY 2025-26 Revenue Percentage of General Fund Total..................... 7
Motor License Fund Overview............................................................. 8
FY 2025-26 Revenue Percentage of Motor License Fund Total.......... 9
General Fund Estimate Methodologies............................................... 10
Motor License Fund Estimate Methodologies.................................... 33
Recent Changes in Tax Law.………..……………........................................ 39
ESTIMATE DOCUMENTATION
ECONOMIC OVERVIEW
The Pennsylvania Department of Revenue and the Office of the Budget use economic forecast data from S&P
Global Market Intelligence (S&P), Moody’s Analytics, and other economic sources to inform official tax revenue
estimates and forecasts.
U.S. Recent Trends and Current Conditions
From 2018 to 2024, real GDP growth in the U.S. fluctuated,
highlighting both the economy’s resilience and its challenges.
Real GDP growth reached 3.0 percent in 2018 and 2.6 percent
in 2019 but experienced a sharp contraction of -2.2 percent in
2020 due to the COVID-19 pandemic. The economy
rebounded in 2021, growing by 6.1 percent thanks to recovery
efforts and fiscal stimulus. By 2025, real GDP is expected to
grow at 2.0 percent, signaling a moderate but sustained
expansion.
The federal funds rate also experienced major shifts during
this period. Between 2017 and 2019, the Federal Reserve
steadily raised the rate from 0.65 percent to 2.40 percent as
the economy strengthened. In 2020, it slashed rates to near-
zero levels (0.05 percent) to counter the pandemic’s economic
impact, keeping the rates there through 2021. Starting in
2022, the Federal Reserve launched an aggressive rate-hike
campaign to fight inflation, pushing the rate to 4.10 percent
by the end of the year and peaking at 5.33 percent in mid-
2023. Rates remained elevated throughout most of 2024 but
started easing toward the end of the year.
The Forecast
Real GDP growth is expected to decelerate over the next three years, reflecting slower economic momentum.
In 2025, growth is forecasted to drop to 2.0 percent, with a slight rebound to 2.1 percent in 2026, before
tapering further to 1.8 percent in 2027, and edging back up to 1.9 in 2028. This gradual forecasted slowdown is
driven by rising unemployment, subdued corporate profit growth, and easing consumption rates.
The federal funds rate is expected to decline steadily over the same period. Analysts predict rates will decrease
through 2025 before stabilizing in 2026 as inflationary pressures ease and monetary policy seeks to stimulate
economic activity.
Charts 1 and 2 illustrate U.S. macroeconomic projections based on S&P’s November 2024 baseline scenario.
Table 1 highlights the annual growth rates of key economic indicators, while Table 2 provides a narrative
summary of various indicators.
1
ESTIMATE DOCUMENTATION
ECONOMIC OVERVIEW
Table 1
Forecast Change in
Key U.S. Economic Indicators
Annual Percentage Growth
Indicator
2024p
2025p
2026p
2027p
Real GDP
2.7
2.0
2.1
1.8
Total Consumption
2.7
2.6
2.3
2.3
Corporate Profits (After Tax)
7.0
0.1
0.1
1.0
Unemployment Rate (Rate)
4.0
4.4
4.5
4.6
CPI
2.9
2.1
2.4
2.4
Federal Funds (Rate)
5.15
3.79
2.64
2.63
*Assumptions in this chart, as well as other assumptions, are incorporated in the
2025-26 fiscal year revenue estimates
p = projected
Table 2
U.S. Macro Forecast Projection
November 2024
Baseline Forecast (50% Probability)
GDP Growth Real GDP rose 2.9% in 2023. Growth continues at 2.7% in 2024 and 2.0% in 2025.
Consumer Spending Consumption dropped from 3.0% in 2022 to 2.5% in 2023. Growth continues at 2.7% in
2024 and 2.6% in 2025.
Business Fixed
Investment Increased 6.0% in 2023, 3.7% in 2024, and 2.1% in 2025.
Housing Housing starts fell from 1.55 million in 2022 to 1.42 million in 2023 before continuing
downward to 1.35 million in 2024 and ticking up to 1.34 million in 2025.
Exports Rose 2.8% in 2023 and are expected to rise to 3.5% in 2024 and 4.0% in 2025.
Fiscal Policy
Under the Fiscal Responsibility Act of 2023 (FRA23) the debt ceiling is suspended with
the assumption that it will be raised.
Monetary Policy Upper end of the federal funds rate target to remain at 5.50% through mid-2024.
Credit Conditions Tightened in 2023; conditions ease amidst declining interest rates.
Consumer Confidence Gently escalated through 2023.
Oil Prices (Dollars/barrel) Average price of Brent crude oil fell from $101/barrel in 2022 to $83 in 2023. It slips to
$81 in 2024 before falling to $71 in 2025.
Stock Markets Moody’s finds that the year-end value of the S&P 500 rose 4.5% in 2023 over the
previous year, with growth of 25.7% in 2024 with a projected fall to 4.6% in 2025.
Inflation (CPI) The Consumer Price Index (CPI) for all items increased to 4.1% in 2023 and is expected
to moderate to 2.9% in 2024 and 2.1% in 2025.
Foreign Growth
Eurozone GDP will increase from 0.5% in 2023 to 0.7% in 2024, while China's growth will
fall from 5.2% in 2023 to 4.9% in 2024.
U.S. Dollar The broad real dollar gently falls.
2024 S&P Global & Moody’s Analytics.
2
ESTIMATE DOCUMENTATION
ECONOMIC OVERVIEW
Pennsylvania Outlook
Pennsylvania’s economy reflects a mix of opportunities and challenges shaped by its diverse industries, strategic
location, shifting demographics, and evolving governmental policies. The real gross state product (GSP) is
expected to grow at an average annual rate of 1.5 percent through 2029. Personal income is expected to rise by
4.4 percent annually over the same period.
Employment Trends and Sector Highlights
Pennsylvania’s payrolls grew steadily in early 2024, with June seeing a 1.6 percent year-over-year increase,
outpacing the national average. The health care and social services sector drove much of this growth, supported
by gains in ambulatory care, social services, and nursing facilities. Leisure and hospitality also posted strong job
increases, while public-sector payrolls remain below pre-pandemic levels. Construction employment held steady
despite high costs and interest rates. Federal investments in infrastructure and industrial projects provided
crucial support for the sector. The professional and technical services industry, led by advancements in AI,
automation, and biosciences, is a key growth sector, with Pittsburgh emerging as an innovation hub fueled by
the state’s numerous high-quality research universities.
Labor Force Dynamics
In the first half of 2024, Pennsylvania’s labor force grew by nearly 100,000 jobs, a 1.5 percent increase compared
to the previous year. This expansion supported job growth across various sectors, keeping unemployment steady
in the mid-3 percent range. Unemployment is expected to rise in the out years. Long-term issues such as an
aging workforce, slower population growth, retirements, and limited migration pose challenges. Rural counties
continue to face population declines.
Housing and Construction
Home prices in Pennsylvania have risen in recent years due to limited inventory, but the pace of growth is
slowing. In early 2024, the Federal Housing Finance Agency reported a 7.9 percent year-over-year increase in
home prices, down from 8.1 percent in late 2023. Single-family home construction remains subdued, but
multifamily developments and senior housing projects continue to grow.
Energy and Natural Resources
Pennsylvania remains the nation’s second-largest natural gas producer, primarily from the Marcellus Shale.
However, growth in this sector has slowed, driven by a modest decline in natural gas production from previous
years, as well as plateauing pipeline capacity and challenges in expanding infrastructure. Coal production, while
still significant, continues to decline as demand wanes and energy policies shift. Nuclear energy also plays a vital
role in the state’s energy mix.
Export and Trade Strength
In 2023, Pennsylvania’s exports hit a record $52.9 billion, led by chemicals, electronics, and machinery. Canada
and Mexico remain the state’s top trading partners. The strong export performance reflects Pennsylvania’s
robust manufacturing and high-tech industries, which continue to attract global demand.
3
ESTIMATE DOCUMENTATION
ECONOMIC OVERVIEW
Strategic Location and Logistics
Pennsylvania’s central location and access to major ports drive its transportation and warehousing sectors. The
state’s proximity to major population centers, along with strong infrastructure and connectivity, supports a
booming logistics industry. E-commerce growth has further boosted demand for warehousing and delivery
services, especially in areas like Allentown.
Table 3 shows various historical and projected key economic indicators for Pennsylvania and the U.S. economy.
Table 3
Key Economic Indicators for Pennsylvania and the United States
Key Economic Indicators
2022
2023
2024
2025
2026
2027
Real Gross State Product (in millions, 2017 dollars)
$
779,361
799,229
818,840
836,833
852,709
867,821
Real Gross State Product (percentage change)
%
1.8
2.5
2.5
2.2
1.9
1.8
Total Employment (in thousands)
5,984
6,087
6,177
6,221
6,217
6,209
Total Employment (percentage change)
%
3.9
1.7
1.5
0.7
(0.1)
(0.1)
Manufacturing Employment (in thousands)
564
566
567
565
552
545
Nonmanufacturing Employment (in thousands)
5,420
5,520
5,611
5,656
5,665
5,664
Population (in thousands)
12,970
12,963
12,978
13,007
13,031
13,039
Population (percentage change)
%
(0.3)
(0.1)
0.1
0.2
0.2
0.1
Unemployment Rate (percentage)
%
4.1
3.4
3.4
4.1
4.4
4.6
Personal Income (percentage change)
%
2.2
5.3
4.7
5.1
4.9
4.7
Copyright 2024 S&P Global.
4
ESTIMATE DOCUMENTATION
METHODOLOGY OVERVIEW
For the 2024-25 revised and 2025-26 budget estimates, three types of models were used: (1) econometric, (2)
structural, and (3) combined structural and econometric models. An econometric model assumes that tax
revenues are a function of one or more economic factors. An example of such a model is the realty transfer tax
model. Structural models forecast revenue based on the statutory requirements, on the timing of tax
remittances, and on projected changes in aggregate liabilities. Projected changes in tax liabilities are estimated
either from economic data or from historic patterns.
Econometric models are estimated using least squares regression. Regression analysis assumes a relationship
where the dependent variable,
y
, equals the sum of the products of independent variables,
x
n
, and their
respective coefficients,
β
n
, plus an error term,
e
:
exxy nn ++++=
βββ
...
110
A regression equation,
y x x e
n n
= + + + +
β β β
0 1 1 ...
, differs from the true equation by an error term
e
. The
method of least squares regression estimates values for the coefficients
β β β
0 1
, , ...,
n
such that the sum of the
squared error terms is minimized. Once a regression equation is determined, a projection of future estimates
may be derived using forecasts of the independent variables.
Certain econometric models need to be adjusted for a serial correlation bias. The autoregressive coefficient of
the residual, ρ (rho), is used to adjust these forecasts. The corrected forecast equals:
tnn
tvxx
y++++=
βββ
...
110
=1
−1 +
...
+
− +
where t equals the number of observations into the forecast period and z equals the number of prior periods
included in the autoregressive equation. All models for which vt is shown are adjusted to correct for a serial
correlation bias.
For further information on individual tax types, such as tax rate, tax base, subject entities, exemptions, etc.,
please refer to the Tax Compendium.
5
2024-25 2025-26 2026-27 2027-28 2028-29 2029-30
REVISED BUDGET ESTIMATE ESTIMATE ESTIMATE ESTIMATE 2025-26 2026-27 2027-28 2028-29 2029-30
Total General Fund 46,050.3 48,382.5 51,212.0 52,304.7 53,523.2 54,704.3 5.1% 5.8% 2.1% 2.3% 2.2%
Total Tax Revenue 44,695.6 46,282.7 48,661.7 49,713.2 50,775.1 51,804.4 3.6% 5.1% 2.2% 2.1% 2.0%
Total Corporation Taxes 7,703.6 7,962.0 8,604.0 8,100.0 7,414.9 6,774.3 3.4% 8.1% -5.9% -8.5% -8.6%
Accelerated Deposits 0.0 0.0 0.0 0.0 0.0 0.0
Corporate Net Income 5,460.5 5,635.5 6,471.3 5,985.5 5,235.4 4,529.2 3.2% 14.8% -7.5% -12.5% -13.5%
Gross Receipts 1,323.3 1,367.0 1,431.9 1,461.1 1,507.9 1,553.8 3.3% 4.7% 2.0% 3.2% 3.0%
Utility Property 46.3 46.9 47.5 48.1 48.7 49.4 1.3% 1.3% 1.3% 1.2% 1.4%
Insurance Premium 540.3 551.1 579.6 602.9 622.9 641.9 2.0% 5.2% 4.0% 3.3% 3.1%
Bank Shares 308.6 361.5 73.7 2.4 0.0 0.0 17.1% -79.6% -96.7% -100.0%
Mutual Thrift 24.6 0.0 0.0 0.0 0.0 0.0 -100.0%
Total Consumption Taxes 15,762.9 16,042.0 16,683.1 17,260.6 17,854.7 18,391.6 1.8% 4.0% 3.5% 3.4% 3.0%
Sales and Use - Total 14,570.3 14,871.0 15,501.6 16,048.1 16,623.1 17,194.5 2.1% 4.2% 3.5% 3.6% 3.4%
Nonmotor 13,258.5 13,553.9 14,135.3 14,627.2 15,146.0 15,673.4 2.2% 4.3% 3.5% 3.5% 3.5%
Motor Vehicle 1,311.8 1,317.1 1,366.3 1,420.9 1,477.1 1,521.1 0.4% 3.7% 4.0% 4.0% 3.0%
Cigarette 570.7 520.1 469.0 417.2 364.9 311.8 -8.9% -9.8% -11.0% -12.5% -14.6%
Other Tobacco Products 141.1 140.6 141.0 142.2 143.9 146.1 -0.4% 0.3% 0.9% 1.2% 1.5%
Malt Beverage 20.2 19.8 19.2 19.0 18.8 18.6 -2.0% -3.0% -1.0% -1.1% -1.1%
Liquor 460.6 474.9 489.3 503.8 518.5 533.4 3.1% 3.0% 3.0% 2.9% 2.9%
Adult Use Cannabis 0.0 15.6 63.0 130.3 185.5 187.2 303.8% 106.8% 42.4% 0.9%
Total Other Taxes 21,229.1 22,278.7 23,374.6 24,352.6 25,505.5 26,638.5 4.9% 4.9% 4.2% 4.7% 4.4%
Personal Income - Total 18,677.2 19,635.1 20,596.3 21,464.6 22,514.1 23,555.9 5.1% 4.9% 4.2% 4.9% 4.6%
Withholding 13,753.4 14,439.3 15,095.5 15,520.6 16,081.8 16,670.8 5.0% 4.5% 2.8% 3.6% 3.7%
Quarterly 2,623.5 2,698.2 2,850.6 3,051.0 3,269.2 3,478.1 2.8% 5.6% 7.0% 7.2% 6.4%
Annual 2,300.3 2,497.6 2,650.2 2,893.0 3,163.1 3,407.0 8.6% 6.1% 9.2% 9.3% 7.7%
Realty Transfer 593.6 710.3 811.9 876.8 939.9 1,001.8 19.7% 14.3% 8.0% 7.2% 6.6%
Inheritance 1,660.8 1,628.7 1,670.9 1,722.0 1,763.9 1,794.8 -1.9% 2.6% 3.1% 2.4% 1.8%
Gaming 389.7 402.7 416.1 428.8 442.6 456.8 3.3% 3.3% 3.1% 3.2% 3.2%
Minor and Repealed -92.2 -98.1 -120.6 -139.6 -155.0 -170.8 -6.4% -22.9% -15.8% -11.0% -10.2%
Total Nontax Revenue 1,354.7 2,099.8 2,550.3 2,591.5 2,748.1 2,899.9 55.0% 21.5% 1.6% 6.0% 5.5%
GENERAL FUND OVERVIEW
REVENUE ESTIMATES ($M)
GROWTH RATES
6
GENERAL FUND OVERVIEW
FY 2025-26 SHARE OF TOTAL
Corporation Taxes
16.5%
Consumption Taxes
33.2%
Other Taxes
46.0%
Non-Tax
4.3%
7
2024-25 2025-26 2026-27 2027-28 2028-29 2029-30
REVISED BUDGET ESTIMATE ESTIMATE ESTIMATE ESTIMATE 2025-26 2026-27 2027-28 2028-29 2029-30
Total Motor License Fund 3,115.5 3,084.1 3,094.9 3,127.0 3,145.0 3,173.2 -1.0% 0.4% 1.0% 0.6% 0.9%
Total - Liquid Fuels Taxes 1,723.7 1,701.0 1,674.7 1,651.6 1,632.9 1,608.7 -1.3% -1.5% -1.4% -1.1% -1.5%
Motor Carriers / IFTA 137.6 136 134.4 133.3 132.3 131.1 -1.2% -1.2% -0.8% -0.8% -0.9%
Alternative Fuels 18.5 19.3 20 20.8 21.5 22.4 4.3% 3.6% 4.0% 3.4% 4.2%
Oil Company Franchise 964.8 951.6 936.3 922.6 911.6 897.3 -1.4% -1.6% -1.5% -1.2% -1.6%
Contra OCFT -35 -35 -35 -35 -35 -35 0.0% 0.0% 0.0% 0.0% 0.0%
Act 89-2013 OCF - Fuels 137.8 135.1 133.8 132.8 131.7 130.3 -2.0% -1.0% -0.7% -0.8% -1.1%
Act 89-2013 OCF - Liquid Fuels 500 494 485.2 477.1 470.8 462.6 -1.2% -1.8% -1.7% -1.3% -1.7%
Minor and Repealed 000000
Total - Licenses & Fees 1,293.0 1,357.4 1,396.6 1,451.5 1,488.1 1,540.5 5.0% 2.9% 3.9% 2.5% 3.5%
Special Hauling Permits 35.7 38 38.3 40.6 41 43.1 6.4% 0.8% 6.0% 1.0% 5.1%
International Registration Plan (IRP) 196.7 212.6 217.8 234.8 240.7 256.7 8.1% 2.4% 7.8% 2.5% 6.6%
Operators' Licenses 80.4 86.9 89.1 96 98.5 105.1 8.1% 2.5% 7.7% 2.6% 6.7%
Real ID 9.6 9.6 9.6 9.6 9.6 9.6 0.0% 0.0% 0.0% 0.0% 0.0%
Vehicle Registration & Titling 968.1 1007.8 1039.2 1067.9 1095.7 1123.4 4.1% 3.1% 2.8% 2.6% 2.5%
Miscellaneous Collections 2.5 2.5 2.6 2.6 2.6 2.6 0.0% 4.0% 0.0% 0.0% 0.0%
Total - Other Motor Receipts 98.8 25.7 23.6 23.9 24.0 24.0 -74.0% -8.2% 1.3% 0.4% 0.0%
Fines, Pen., & Int. 000000
Misc.-Treasury 96.4 23.3 21.2 21.4 21.5 21.5 -75.8% -9.0% 0.9% 0.5% 0.0%
Other Miscellaneous 2.4 2.4 2.4 2.5 2.5 2.5 0.0% 0.0% 4.2% 0.0% 0.0%
MOTOR LICENSE FUND OVERVIEW
REVENUE ESTIMATES ($M)
GROWTH RATES
8
LIQU
1701 0.551539
OTH
25.7
L&F 1357.4
3084.1
MOTOR LICENSE FUND OVERVIEW
FY 2025-26 SHARE OF TOTAL
Liquid Fuels Taxes
55.2%
Licenses & Fees
44.0%
Other Motor Receipts
0.8%
9
FISCAL YEAR RECEIPTS GROWTH
2018-19 0.0 --
2019-20 0.0 --
2020-21 0.0 --
2021-22 0.0 --
2022-23 0.0 --
2023-24 0.0 --
2024-25 0.0 --
2025-26 15.6 --
2026-27 63.0 303.8%
2027-28 130.3 106.8%
2028-29 185.5 42.4%
2029-30 187.2 0.9%
TYPE:
DATA FREQUENCY:
METHOD:
This budget proposes an Adult Use Cannabis Tax that would be imposed on the wholesale price of products sold through the
regulated framework of the production and sales system, once legalized. Estimates assume sales would commence January 1, 2026. All
taxes are deposited in the General Fund. The proposed rate is 20 percent of the wholesale price of cannabis products.
These estimates have been derived using wholesale Marijuana Excise Tax collections and retail sales from
Colorado and assume similar growth patterns and markup percentages.
2025-26 BUDGET PROPOSALS
GENERAL FUND ESTIMATE METHODOLOGIES
ADULT USE CANNABIS
MODEL
Structural
Annual
0
20
40
60
80
100
120
140
160
180
200
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
FORECAST
10
FISCAL YEAR RECEIPTS GROWTH
2018-19 352.2 3.4%
2019-20 369.8 5.0%
2020-21 399.9 8.2%
2021-22 415.7 4.0%
2022-23 331.4 -20.3%
2023-24 362.2 9.3%
2024-25 308.6 -14.8%
2025-26 361.5 17.1%
2026-27 73.7 -79.6%
2027-28 2.4 -96.7%
2028-29 0.0 -100.0%
2029-30 0.0 --
TYPE:
DATA FREQUENCY:
METHOD:
Estimate results from a structural model that utilizes historical Bank Shares Tax (BST) data to estimate taxable
shares. Growth is determined using historical BST collections and industry trends.
2025-26 BUDGET PROPOSALS
Effective tax year 2026, BST would be eliminated and bank and trust companies would be subject to the Corporate Net Income Tax
(CNIT), including the proposed uniform filing requirements with rate changes.
Effective fiscal year 2025-26, the Waterfront Development, Video Game Production, Manufacturing, and Local Resource
Manufacturing Tax Credits are repealed.
GENERAL FUND ESTIMATE METHODOLOGIES
BANK AND TRUST COMPANY SHARES TAX AND TITLE INSURANCE COMPANY SHARES TAX
MODEL
Structural
Annual
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL
CURRENT LAW
WITH PROPOSALS
11
FISCAL YEAR RECEIPTS GROWTH
2018-19 1,118.8 -6.6%
2019-20 924.3 -17.4%
2020-21 964.2 4.3%
2021-22 874.1 -9.3%
2022-23 772.9 -11.6%
2023-24 668.0 -13.6%
2024-25 570.7 -14.6%
2025-26 520.1 -8.9%
2026-27 469.0 -9.8%
2027-28 417.2 -11.0%
2028-29 364.9 -12.5%
2029-30 311.8 -14.6%
LABEL TYPE
CIG Dependent
P Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Children's Health Insurance Program - $30.73M per fiscal year
Agricultural Conservation Easement Purchase Fund - $25.485M per fiscal year
Local Cigarette Tax Fund - amount varies based on Local Cigarette Tax Fund deposits
Tobacco Revenue Bond Debt Service Account - when authorized, $115.34M per fiscal year
EQUATION:
MODEL: R20.835 PARAMETERS: β0-0.34
F70.8 β12.79
DW 2.07 β2-13.76
DF 28
N31
Dummy variable used to capture impact of COVID-19 pandemic
GENERAL FUND ESTIMATE METHODOLOGIES
CIGARETTE TAX
VARIABLES
DESCRIPTION
Logged quarterly gross Cigarette collections
v
t
= 0.9104
t-4
STATISTICS
2025-26 BUDGET PROPOSALS
Effective for FY 2025-26 and continuing through the forecast horizon, an annual transfer for debt service related to the Tobacco
Settlement Bonds is proposed.
MODEL
Autoregression
Quarterly
Yes, one quarter
Model output is adjusted for the following transfers:
CIG = -0.0191 + 0.0632 P
t
+ v
t
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL
CURRENT LAW
WITH PROPOSALS
12
FISCAL YEAR RECEIPTS GROWTH
2018-19 3,397.5 18.0%
2019-20 2,826.9 -16.8%
2020-21 4,423.8 56.5%
2021-22 5,323.1 20.3%
2022-23 6,142.9 15.4%
2023-24 5,651.5 -8.0%
2024-25 5,460.5 -3.4%
2025-26 5,635.5 3.2%
2026-27 6,471.3 14.8%
2027-28 5,985.5 -7.5%
2028-29 5,235.4 -12.5%
2029-30 4,529.2 -13.5%
LABEL TYPE
CNIT Dependent
PROFIT Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
MODEL: R20.527 T-STATISTICS β01.15
F23.4 β14.84
DW 1.53
DF 21
N23
TAX YEAR CURRENT LAW PROPOSAL
2025 7.99% 7.99%
2026 7.49% 7.24%
2027 6.99% 6.49%
2028 6.49% 5.74%
2029 5.99% 4.99%
2030 5.49% 4.99%
GENERAL FUND ESTIMATE METHODOLOGIES
CORPORATE NET INCOME TAX
VARIABLES
DESCRIPTION
Logged Corporate Net Income Tax payments by tax year
This budget proposes accelerating rate reductions from 0.5 to 0.75 percent per year, starting January 1, 2026 and reaching 4.99
percent by 2029:
Logged before-tax corporate profits including inventory valuation, rest-of-world corporate
profits, and profits of the Federal Reserve system adjustments
STATISTICS
2025-26 BUDGET PROPOSALS
MODEL
Autoregression
Annual
Yes, one year
Tax year payments are cash flowed into fiscal year payments
CNIT
t
= 0.0208 + 0.5068 PROFIT
t
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL
CURRENT LAW
WITH PROPOSALS
13
2025-26 BUDGET PROPOSALS (continued)
Effective fiscal year 2025-26, the Waterfront Development, Video Game Production, Manufacturing, and Local Resource
Manufacturing Tax Credits are repealed.
In addition, effective tax year 2026, the tax system will be modernized by adopting uniform filing requirements while adding financial
institutions to the tax base.
GENERAL FUND ESTIMATE METHODOLOGIES
CORPORATE NET INCOME TAX (continued)
14
FISCAL YEAR RECEIPTS GROWTH
2018-19 72.9 -3.2%
2019-20 68.0 -6.8%
2020-21 64.1 -5.7%
2021-22 66.9 4.3%
2022-23 66.0 -1.3%
2023-24 67.2 1.8%
2024-25 66.5 -1.1%
2025-26 68.6 3.2%
2026-27 68.6 0.0%
2027-28 68.6 0.0%
2028-29 68.6 0.0%
2029-30 68.6 0.0%
TYPE:
DATA FREQUENCY:
METHOD:
Fines, penalties, and interest on taxes are included with their respective tax types. Other fines, penalties, and
interest are collected by several different departments. Each of these departments prepares estimates which
are reviewed and totaled by the Department of Revenue.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Fines, Penalties, and Interest.
GENERAL FUND ESTIMATE METHODOLOGIES
FINES, PENALTIES, AND INTEREST
MODEL
Structural
Annual
58.0
60.0
62.0
64.0
66.0
68.0
70.0
72.0
74.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
15
FISCAL YEAR RECEIPTS GROWTH
2018-19 131.7 3.4%
2019-20 143.0 8.6%
2020-21 241.8 69.1%
2021-22 307.9 27.3%
2022-23 365.1 18.6%
2023-24 360.5 -1.3%
2024-25 389.7 8.1%
2025-26 402.7 3.3%
2026-27 416.1 3.3%
2027-28 428.8 3.1%
2028-29 442.6 3.2%
2029-30 456.8 3.2%
LABEL TYPE
GTGR Dependent
P Independent
P2 Independent
T Independent
C Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
METHOD:
MODEL (B): R20.996 T-STATISTICS: β0265.92
F2176.6 β1-108.51
DW 2.14 β210.95
DF 47 β312.44
N53 β4-5.78
β5-4.13
Quarterly
GENERAL FUND ESTIMATE METHODOLOGIES
GAMING TAXES
VARIABLES
DESCRIPTION
Logged quarterly gross table game revenue for category 1-3 casinos
Dummy variable used to capture impact of COVID-19 pandemic
Dummy variable used to capture subsequent impact of COVID-19 pandemic
Time (2011 Q3=1)
Logged time from category 4 opening (2020 Q4=1)
MODEL
Econometric (categories 1-3 casino Table Game Taxes component) and Structural
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Gaming Taxes.
None
None needed as model output is already cash collections
GTGR
t
= 5.1081 - 3.0297 P
t
+ 0.2810 P2
t
+ 0.0108 T
t
- 0.0782 C
t
+ v
t
v
t
= 0.5344 v
t-1
The result of the categories 1-3 casino Table Game Taxes component is added to the structural models for the
other gaming taxes, which includes category 4 casino Table Game, Interactive Gaming, Fantasy Contest, and
Sports Wagering Taxes.
STATISTICS
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
16
FISCAL YEAR RECEIPTS GROWTH
2018-19 1,250.1 8.7%
2019-20 1,104.3 -11.7%
2020-21 990.0 -10.3%
2021-22 1,022.4 3.3%
2022-23 1,181.0 15.5%
2023-24 1,389.2 17.6%
2024-25 1,323.3 -4.7%
2025-26 1,367.0 3.3%
2026-27 1,431.9 4.7%
2027-28 1,461.1 2.0%
2028-29 1,507.9 3.2%
2029-30 1,553.8 3.0%
LABEL TYPE
ELEC Dependent
TELE Dependent
USSPEND Independent
D Independent Dummy variable controlling for electricity market changes
MARKET Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Alternative Fuels Incentive Grant Fund - 0.25 mill of the tax collected during the fiscal year
EQUATION ELECTRIC:
EQUATION TELECOM:
ELECTRIC TELECOM ELECTRIC TELECOM
MODEL: R20.501 0.940 T-STATISTICS β00.51 64.96
F10.0 281.0 β12.40 -16.76
DW 1.99 1.43 β2-2.99 ---
DF 20 18
N23 20
Telecommunications Gross Receipts Tax payments by calendar year
GENERAL FUND ESTIMATE METHODOLOGIES
GROSS RECEIPTS TAX
VARIABLES
DESCRIPTION
Electric Gross Receipts Tax payments by calendar year
Effective fiscal year 2025-26, the Manufacturing Tax Credit is repealed.
US consumer spending on electricity
Dummy variable controlling for telecommunications market changes
MODEL
Annual
Yes, one year, electric equation only
Model outputs are cash flowed into fiscal year payments and adjusted for the following transfer:
ELEC
t
= 7.6006 + 3.5969 USSPEND
t
- 164.9927 D
t
TELE
t
= 469.3552 - 149.0493 MARKET
t
STATISTICS
2025-26 BUDGET PROPOSALS
Econometric (Electric and Telecommunications Gross Receipts Tax) and Structural (Transportation Gross
Receipts Tax)
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL
CURRENT LAW
WITH PROPOSALS
17
FISCAL YEAR RECEIPTS GROWTH
2018-19 1,053.6 3.4%
2019-20 1,082.0 2.7%
2020-21 1,345.5 24.3%
2021-22 1,550.4 15.2%
2022-23 1,524.4 -1.7%
2023-24 1,636.0 7.3%
2024-25 1,660.8 1.5%
2025-26 1,628.7 -1.9%
2026-27 1,670.9 2.6%
2027-28 1,722.0 3.1%
2028-29 1,763.9 2.4%
2029-30 1,794.8 1.8%
LABEL TYPE
IT Dependent
SPD Independent
P Independent
MR Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
MODEL: R20.370 T-STATISTICS: β01.41
F32.9 β15.71
DW 2.08 β27.89
DF 280 β35.46
N286 β4-2.09
β5-2.07
Logged S&P 500 stock index multiplied by Pennsylvania deaths
GENERAL FUND ESTIMATE METHODOLOGIES
INHERITANCE TAX
VARIABLES
DESCRIPTION
Logged monthly Inheritance Tax collections
There are no proposals in the 2025-26 budget that affect Inheritance Tax.
Dummy variable used to capture impact of COVID-19 pandemic
Monthly adjustment capturing changes in larger deposit days (Mondays/Thursdays)
MODEL
Autoregression
Monthly
Yes, 12 month
None needed as model output is already cash collections
IT = 0.0137 + 0.2617 SPD
t
+ 0.4765 P
t
+ 0.0645 MR
t
+ v
t
v
t
= 0.1241 v
t-6
+ 0.1245 v
t-10
STATISTICS
2025-26 BUDGET PROPOSALS
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
18
FISCAL YEAR RECEIPTS GROWTH
2018-19 444.3 3.4%
2019-20 473.6 6.6%
2020-21 451.8 -4.6%
2021-22 482.3 6.8%
2022-23 521.8 8.2%
2023-24 546.8 4.8%
2024-25 540.3 -1.2%
2025-26 551.1 2.0%
2026-27 579.6 5.2%
2027-28 602.9 4.0%
2028-29 622.9 3.3%
2029-30 641.9 3.1%
LABEL TYPE
IPT Dependent
CS Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Fire Insurance Tax Fund - the greater of $85M or 8.5% of revenues
Municipal Pension Aid Fund - the greater of $345M or 38% of revenues
EQUATION:
MODEL: R20.794 PARAMETERS: β01.57
F23.1 β16.02
DW 1.96 β24.76
DF 12
N15
Liabilities are cash flowed into fiscal year payments and adjusted for the following transfers:
US consumer spending on all goods and servicess
MODEL
Autoregression
Annual
Yes, one year
GENERAL FUND ESTIMATE METHODOLOGIES
INSURANCE PREMIUMS TAX
VARIABLES
DESCRIPTION
Insurance Premiums Tax liabilities by tax year
v
t
= -0.7884 v
t-1
STATISTICS
2025-26 BUDGET PROPOSALS
Effective fiscal year 2025-26, the Waterfront Development, Video Game Production, Manufacturing, and Local Resource
Manufacturing Tax Credits are repealed.
IPT
t
= 5.3747 + 0.0281 CS
t
+ v
t
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL
CURRENT LAW
WITH PROPOSALS
19
FISCAL YEAR RECEIPTS GROWTH
2018-19 543.6 1.2%
2019-20 411.8 -24.2%
2020-21 963.2 133.9%
2021-22 4,393.6 356.2%
2022-23 889.6 -79.8%
2023-24 1,356.4 52.5%
2024-25 1,103.1 -18.7%
2025-26 1,846.1 67.4%
2026-27 2,296.6 24.4%
2027-28 2,337.8 1.8%
2028-29 2,494.4 6.7%
2029-30 2,646.2 6.1%
TYPE:
DATA FREQUENCY:
METHOD:
License, application, and renewal fees related to regulating skill games are also included in estimates above.
This budget proposes regulating currently unlicensed skill games under the existing VGT tax structure starting July 1, 2025. While the
overall VGT tax rate remains 52 percent, this budget proposes a modification of the individual components of the assessments and
distribution of the revenues. The tax on all machines consists of two assessments, an assessment of 5 percent of GTR will be
transferred to the Lottery Fund, and an assessment of 47 percent of GTR will be transferred to the General Fund after paying a fixed
annual payment for local share assessment and a transfer to the Compulsive and Problem Gambling Treatment Fund.
GENERAL FUND ESTIMATE METHODOLOGIES
LICENSES, FEES, AND MISCELLANEOUS
MODEL
Structural
Annual
This category consists mainly of revenues from the sale of licenses, the collection of fees from numerous
sources, transfers from other funds, and interest earned on General Fund deposits. These nontax revenues
are collected by various departments. Each of these departments prepares estimates which are reviewed and
totaled by the Department of Revenue.
Additionally, tax from video gaming terminals (VGTs) is deposited into the General Fund as a transfer. The tax
is remitted bimonthly, and collections net of the transfer to the Compulsive and Problem Gambling Treatment
Fund are transferred to the General Fund on the last day of the fiscal year. This tax is forecasted in a structural
model.
2025-26 BUDGET PROPOSALS
The legalization of adult use cannabis is proposed with sales beginning in January 2026. Application and licensing fees related to
businesses entering the adult use cannabis marketplace are included above.
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
4,500.0
5,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL CURRENT LAW WITH PROPOSALS
20
FISCAL YEAR RECEIPTS GROWTH
2018-19 381.9 2.8%
2019-20 365.7 -4.2%
2020-21 415.8 13.7%
2021-22 431.3 3.7%
2022-23 450.8 4.5%
2023-24 448.8 -0.4%
2024-25 460.6 2.6%
2025-26 474.9 3.1%
2026-27 489.3 3.0%
2027-28 503.8 3.0%
2028-29 518.5 2.9%
2029-30 533.4 2.9%
LABEL TYPE
LIQ Dependent
P Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
MODEL: R20.947 PARAMETERS: β07.77
F407.7 β112.08
DW 2.03 β231.91
DF 97 β326.13
N102 β431.15
Dummy variable used to capture impact of COVID-19 pandemic
GENERAL FUND ESTIMATE METHODOLOGIES
LIQUOR TAX
VARIABLES
DESCRIPTION
Quarterly Liquor Tax collections
v
t
= -1.0028
t-1
- 0.9750
t-2
- 0.9545
t-3
STATISTICS
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Liquor Tax.
MODEL
Autoregression
Quarterly
Yes, one quarter
None needed as model output is already cash collections
LIQ = 0.7540 + 33.1692 P
t
+ v
t
0.0
100.0
200.0
300.0
400.0
500.0
600.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
21
FISCAL YEAR RECEIPTS GROWTH
2018-19 -23.0 -35.1%
2019-20 -44.3 92.6%
2020-21 -37.9 -14.4%
2021-22 -50.9 34.2%
2022-23 -62.0 21.9%
2023-24 -91.8 48.1%
2024-25 -92.2 0.4%
2025-26 -98.1 6.4%
2026-27 -120.6 22.9%
2027-28 -139.6 15.8%
2028-29 -155.0 11.0%
2029-30 -170.8 10.2%
TYPE:
DATA FREQUENCY:
METHOD:
Estimates are based on historical collections.
GENERAL FUND ESTIMATE METHODOLOGIES
MINOR AND REPEALED
MODEL
Structural
Annual
In addition, Minor and repealed includes the General Fund impact of:
Minor and Repealed tax revenues are derived from:
the tax on legal documents
the Tavern Games Tax
the Excess Vehicle Rental Tax
the Corporate Loans Tax (repealed)
the tax on electric cooperatives
the tax on agricultural cooperative associations
the Wine Excise Tax
the Consumer Fireworks Fax
the Capital Stock & Franchise Tax (repealed)
the Neighborhood Improvement Zone,
the City Revitalization and Improvement Zones,
the Military Installation Remediation Project
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Minor and Repealed.
-200.0
-180.0
-160.0
-140.0
-120.0
-100.0
-80.0
-60.0
-40.0
-20.0
0.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
22
FISCAL YEAR RECEIPTS GROWTH
2018-19 23.5 -2.4%
2019-20 23.2 -1.6%
2020-21 23.3 0.4%
2021-22 22.5 -3.4%
2022-23 22.4 -0.2%
2023-24 21.4 -4.7%
2024-25 20.2 -5.5%
2025-26 19.8 -2.0%
2026-27 19.2 -3.0%
2027-28 19.0 -1.0%
2028-29 18.8 -1.1%
2029-30 18.6 -1.1%
LABEL TYPE
MBT Dependent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
MODEL: R20.908 PARAMETERS: β0-1.89
F262.6 β112.73
DW 1.87 β227.88
DF 80 β312.20
N84
MODEL
GENERAL FUND ESTIMATE METHODOLOGIES
MALT BEVERAGE TAX
VARIABLES
DESCRIPTION
Quarterly Malt Beverage Tax collections
STATISTICS
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Malt Beverage Tax.
Autoregression
Quarterly
Yes, one quarter
None needed as model output is already cash collections
MBT = -0.0155 + v
t
v
t
= -0.8372
t-1
- 0.9648
t-2
- 0.7964
t-3
0.0
5.0
10.0
15.0
20.0
25.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
23
FISCAL YEAR RECEIPTS GROWTH
2018-19 28.0 3.4%
2019-20 23.1 -17.4%
2020-21 23.0 -0.3%
2021-22 33.1 43.5%
2022-23 34.4 4.0%
2023-24 38.4 11.8%
2024-25 24.6 -36.0%
2025-26 0.0 -100.0%
2026-27 0.0 --
2027-28 0.0 --
2028-29 0.0 --
2029-30 0.0 --
TYPE:
DATA FREQUENCY:
METHOD:
Estimate is derived from Mutual Thrift Institutions Tax (MTIT) history and forecasts based on industry data and
other impacts on collections, such as the expansion of tax credit utilization and appeals.
2025-26 BUDGET PROPOSALS
Effective tax year 2026, MTIT would be eliminated and mutual thrift institutions would be subject to the Corporate Net Income Tax
(CNIT), including the proposed uniform filing requirements with rate changes.
Effective fiscal year 2025-26, the Waterfront Development, Video Game Production, Manufacturing, and Local Resource
Manufacturing Tax Credits are repealed.
GENERAL FUND ESTIMATE METHODOLOGIES
MUTUAL THRIFT INSTITUTIONS TAX
MODEL
Structural
Annual
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL
CURRENT LAW
WITH PROPOSALS
24
FISCAL YEAR RECEIPTS GROWTH
2018-19 129.9 9.1%
2019-20 127.3 -2.0%
2020-21 134.9 6.0%
2021-22 149.4 10.8%
2022-23 152.6 2.1%
2023-24 146.4 -4.0%
2024-25 141.1 -3.6%
2025-26 140.6 -0.4%
2026-27 141.0 0.3%
2027-28 142.2 0.9%
2028-29 143.9 1.2%
2029-30 146.1 1.5%
LABEL TYPE
OTP Dependent
P Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
MODEL: R20.615 PARAMETERS: β00.25
F20.8 β1-3.84
DW 2.45 β2-6.55
DF 26
N29
Dummy variable used to capture impact of COVID-19 pandemic
GENERAL FUND ESTIMATE METHODOLOGIES
OTHER TOBACCO PRODUCTS TAX
VARIABLES
DESCRIPTION
Quarterly Other Tobacco Products Tax collections
v
t
= 0.7660
t-4
STATISTICS
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Other Tobacco Products Tax.
MODEL
Autoregression
Quarterly
Yes, one quarter
None needed as model output is already cash collections
OTP = 0.1779 - 3.7609 P
t
+ v
t
110.0
115.0
120.0
125.0
130.0
135.0
140.0
145.0
150.0
155.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
25
FISCAL YEAR RECEIPTS GROWTH
2018-19 3,651.6 8.6%
2019-20 2,292.2 -37.2%
2020-21 5,445.4 137.6%
2021-22 6,099.4 12.0%
2022-23 4,984.3 -18.3%
2023-24 4,655.0 -6.6%
2024-25 4,923.8 5.8%
2025-26 5,195.8 5.5%
2026-27 5,500.8 5.9%
2027-28 5,944.0 8.1%
2028-29 6,432.3 8.2%
2029-30 6,885.1 7.0%
LABEL TYPE
PITQA Dependent
RID Independent
SP500 Independent
D Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATION:
MODEL: R20.823 T-STATISTICS: β0-0.90
F27.9 β12.14
DW 1.83 β27.01
DF 18 β3-5.23
N22
Pennsylvania rent, interest, and dividends
GENERAL FUND ESTIMATE METHODOLOGIES
PERSONAL INCOME TAX - ESTIMATED AND ANNUAL PAYMENTS
VARIABLES
DESCRIPTION
Personal Income Tax quarterly and annual payments on tax year basis
Effective fiscal year 2025-26, the Waterfront Development, Video Game Production, Manufacturing, and Local Resource
Manufacturing Tax Credits are repealed.
Value of the S&P 500 stock index
Dummy variable to account for payment patterns between 2021 and 2023
MODEL
Autoregression
Annual
Yes, one year
Yes, tax year payments are cash flowed into fiscal years
PITQA
t
= -46.2144 + 0.0165 RID
t
+ 1.0450 SP500
t
- 1078.0000 D
t
STATISTICS
2025-26 BUDGET PROPOSALS
Effective January 1, 2026, the minimum wage in Pennsylvania would be raised to $15 per hour for non-tipped workers and $9 per hour
for tipped workers, which causes a net increase in Personal Income Tax revenues beginning in 2025-26.
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
8,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL CURRENT LAW WITH PROPOSALS
26
FISCAL YEAR RECEIPTS GROWTH
2018-19 10,443.9 4.1%
2019-20 10,542.8 0.9%
2020-21 10,838.0 2.8%
2021-22 12,026.2 11.0%
2022-23 12,643.8 5.1%
2023-24 13,201.8 4.4%
2024-25 13,753.4 4.2%
2025-26 14,439.3 5.0%
2026-27 15,095.5 4.5%
2027-28 15,520.6 2.8%
2028-29 16,081.8 3.6%
2029-30 16,670.8 3.7%
LABEL TYPE
PITW Dependent
WAGES Independent
WEDS Independent
Q Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Environmental Stewardship Fund - $9.9M in fiscal year 2024-25 and reauthorized annually
Farm Show Complex Restricted Revenue Account - Approximately $13.3M annually
Election Integrity Restricted Account - $45M annually
Clean Stream Funds - $50M annually
EQUATION:
MODEL: R20.952 T-STATISTICS: β0-1.67
F715.3 β113.97
DW 1.81 β246.24
DF 143 β311.23
N148 β4-4.76
Yes, 12 month
GENERAL FUND ESTIMATE METHODOLOGIES
PERSONAL INCOME TAX - EMPLOYER WITHHOLDING
VARIABLES
DESCRIPTION
Monthly cash payments from Personal Income Tax withholding
US wages and salaries
Variable indicating five Wednesdays in a month
Variable indicating a quarterly withholding due date in a month
MODEL
Autoregression
Monthly
Effective January 1, 2026, the minimum wage in Pennsylvania would be raised to $15 per hour for non-tipped workers and $9 per hour
for tipped workers, which causes a net increase in Personal Income Tax revenues beginning in 2025-26.
Model output is adjusted for the following transfers:
PITW
t
= -6.1262 + 0.0896 WAGES
t
+ 117.2918 WEDS
t
+ 31.4201 Q
t
+ v
t
v
t
= 0.3824
t-3
STATISTICS
2025-26 BUDGET PROPOSALS
Recurring transfers from the Personal Income Tax to the Environmental Stewardship Fund for Growing Greener debt service payments
are proposed, beginning with a transfer of $10.0 million in 2025-26.
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
16,000.0
18,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL CURRENT LAW WITH PROPOSALS
27
FISCAL YEAR RECEIPTS GROWTH
2018-19 36.3 7.3%
2019-20 37.8 4.2%
2020-21 40.2 6.3%
2021-22 39.5 -1.8%
2022-23 46.0 16.4%
2023-24 44.1 -4.2%
2024-25 46.3 5.1%
2025-26 46.9 1.3%
2026-27 47.5 1.3%
2027-28 48.1 1.3%
2028-29 48.7 1.2%
2029-30 49.4 1.4%
TYPE:
DATA FREQUENCY:
METHOD:
Estimate results from a structural model that utilizes historical Public Utility Realty Tax (PURTA) data to
estimate future fiscal year payments.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect PURTA.
GENERAL FUND ESTIMATE METHODOLOGIES
PUBLIC UTILITY REALTY TAX
MODEL
Structural
Annual
0.0
10.0
20.0
30.0
40.0
50.0
60.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
28
FISCAL YEAR RECEIPTS GROWTH
2018-19 534.0 3.8%
2019-20 497.8 -6.8%
2020-21 640.2 28.6%
2021-22 847.1 32.3%
2022-23 643.8 -24.0%
2023-24 530.8 -17.6%
2024-25 593.6 11.8%
2025-26 710.3 19.7%
2026-27 811.9 14.3%
2027-28 876.8 8.0%
2028-29 939.9 7.2%
2029-30 1,001.8 6.6%
LABEL TYPE
GROSS Dependent
VALUE Independent
P Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Keystone Recreation, Park, and Conservation Fund - 15.0% of receipts
PA Housing Affordability and Rehabilitation Enhancement Fund - varies by fiscal year
EQUATION:
MODEL: R20.722 PARAMETERS: β00.58
F32.4 β15.30
DW 2.33 β2-2.78
DF 50 β32.72
N55 β4-3.76
Model output is adjusted for the following transfers:
GENERAL FUND ESTIMATE METHODOLOGIES
REALTY TRANSFER TAX
VARIABLES
DESCRIPTION
Gross quarterly Realty Transfer Tax receipts
U.S. home sales revenue
Dummy variable used to capture impact of COVID-19 pandemic
MODEL
Autoregression
Quarterly
Yes, one quarter
GROSSt = 1.4272 + 0.0773 VALUE
t
- 39.6339 P
t
+ v
t
v
t
= -0.3489 v
t-2
+ 0.4931 v
t-4
STATISTICS
2025-26 BUDGET PROPOSALS
Effective fiscal year 2028-29, the transfer to the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund would
increase from $100 million to $110 million annually.
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL CURRENT LAW WITH PROPOSALS
29
FISCAL YEAR RECEIPTS GROWTH
2018-19 1,483.6 6.5%
2019-20 1,365.0 -8.0%
2020-21 1,847.7 35.4%
2021-22 1,837.9 -0.5%
2022-23 1,384.0 -24.7%
2023-24 1,338.5 -3.3%
2024-25 1,311.8 -2.0%
2025-26 1,317.1 0.4%
2026-27 1,366.3 3.7%
2027-28 1,420.9 4.0%
2028-29 1,477.1 4.0%
2029-30 1,521.1 3.0%
LABEL TYPE
MV Dependent
CDMV Independent US consumer spending on motor vehicles and parts
P Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Public Transportation Assistance Fund - 0.947% of revenues
Public Transportation Trust Fund - 4.4% of revenues
EQUATION:
MODEL: R20.899 PARAMETERS: β00.53
F132.9 β17.45
DW 1.97 β213.65
DF 90 β34.97
N97 β46.21
β54.68
β6-2.63
MV = 0.4418 + 0.4963CDMV
t
+ 210.9483P
t
+ v
t
GENERAL FUND ESTIMATE METHODOLOGIES
SALES AND USE TAX - MOTOR VEHICLE
VARIABLES
DESCRIPTION
Quarterly gross Motor Vehicle Sales and Use Tax collections
Dummy variable used to capture impact of COVID-19 pandemic
MODEL
Autoregression
Quarterly
Yes, one quarter
Model output is adjusted for the following transfers:
Public Transportation Trust Fund - additional transfer which approximates to 3.28% of total Sales and Use
Tax revenues
v
t
= -0.5204
t-1
- 0.6588
t-2
- 0.4902
t-3
+ 0.2735
t-4
STATISTICS
2025-26 BUDGET PROPOSALS
This budget proposes a new transfer to aid in the operations of the Public Transportation Trust Fund equal to 1.75 percent of total
sales and use tax revenues collected, beginning July 1, 2025.
The legalization of adult use cannabis with a 20% wholesale tax is proposed. Retail sales are presumed to begin January 1, 2026, with
Sales and Use Tax being imposed. Motor Vehicle Sales and Use Tax is adversely affected because the Act 83-2013 transfer to PTTF,
which is transferred out of Motor Vehicle Sales and Use Tax only but is calculated on total SUT, will increase.
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL CURRENT LAW WITH PROPOSALS
30
FISCAL YEAR RECEIPTS GROWTH
2018-19 9,616.0 7.0%
2019-20 9,452.8 -1.7%
2020-21 10,987.2 16.2%
2021-22 12,076.3 9.9%
2022-23 12,640.4 4.7%
2023-24 12,917.4 2.2%
2024-25 13,258.5 2.6%
2025-26 13,553.9 2.2%
2026-27 14,135.3 4.3%
2027-28 14,627.2 3.5%
2028-29 15,146.0 3.5%
2029-30 15,673.4 3.5%
LABEL TYPE
NMV Dependent
CD Independent US consumer spending on durable goods less motor vehicles and parts
CS Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
Public Transportation Assistance Fund - 0.947% of revenues
Public Transportation Trust Fund - 4.4% of revenues
Transit Revitalization Investment District Fund - $0.7M
EQUATION:
MODEL: R20.926 PARAMETERS: β00.51
F121.3 β18.04
DW 2.20 β25.90
DF 29 β3-5.00
N33
US consumer spending on food services and accommodation
GENERAL FUND ESTIMATE METHODOLOGIES
SALES AND USE TAX - NON-MOTOR VEHICLE
VARIABLES
DESCRIPTION
Quarterly gross Non-Motor Vehicle Sales and Use Tax collections by filing period
MODEL
Autoregression
Quarterly
Yes, four quarter
NMV = 12.4797 + 1.4021 CD
t
+ 0.5094 CS
t
+ v
t
Model output is cashflowed based on historical payment patterns and adjusted for the following transfers:
Commonwealth Financing Authority - amount necessary for principal and interest obligations
v
t
= 0.6895
t-1
STATISTICS
2025-26 BUDGET PROPOSALS
This budget proposes a new transfer to aid in the operations of the Public Transportation Trust Fund equal to 1.75 percent of total
sales and use tax revenues collected, beginning July 1, 2025.
The legalization of adult use cannabis with a 20% wholesale tax is proposed. Retail sales are presumed to begin January 1, 2026, with
Sales and Use Tax being imposed.
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
16,000.0
18,000.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL CURRENT LAW WITH PROPOSALS
31
Effective January 1, 2026, the minimum wage in Pennsylvania would be raised to $15 per hour for non-tipped workers and $9 per hour
for tipped workers. As workers receive higher wages, they will likely increase their purchases of taxable good and services, which
increases Non-Motor Vehicle Sales and Use Tax collections.
2025-26 BUDGET PROPOSALS (continued)
GENERAL FUND ESTIMATE METHODOLOGIES
SALES AND USE TAX - NON-MOTOR VEHICLE (continued)
32
FISCAL YEAR RECEIPTS GROWTH
2018-19 15.6 9.6%
2019-20 13.0 -16.8%
2020-21 12.2 -6.2%
2021-22 15.4 26.9%
2022-23 18.1 17.1%
2023-24 18.2 0.8%
2024-25 18.5 1.6%
2025-26 19.3 4.3%
2026-27 20.0 3.6%
2027-28 20.8 4.0%
2028-29 21.5 3.4%
2029-30 22.4 4.2%
TYPE:
DATA FREQUENCY:
METHOD:
Alternative Fuels Tax estimates are calculated using a compound annual growth rate that is based on historical
consumption data. Tax rates are calculated and applied from the current oil company franchise tax rate on
gasoline indexed to the energy content of the alternative fuel.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Alternative Fuels Taxes.
MOTOR LICENSE FUND ESTIMATE METHODOLOGIES
ALTERNATIVE FUELS
MODEL
Structural
Annual
0.0
5.0
10.0
15.0
20.0
25.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
33
FISCAL YEAR RECEIPTS GROWTH
2018-19 134.0 -0.5%
2019-20 128.9 -3.7%
2020-21 123.1 -4.5%
2021-22 136.1 10.5%
2022-23 159.0 16.8%
2023-24 146.0 -8.2%
2024-25 137.6 -5.7%
2025-26 136.0 -1.2%
2026-27 134.4 -1.2%
2027-28 133.3 -0.8%
2028-29 132.3 -0.8%
2029-30 131.1 -0.9%
TYPE:
DATA FREQUENCY:
METHOD:
Motor Carriers Road/IFTA Tax estimates are calculated by applying the diesel fuel tax growth from the Oil
Company Franchise Tax (OCFT) model, which is documented on the OCFT page.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Motor Carriers Road/IFTA Taxes.
MOTOR LICENSE FUND ESTIMATE METHODOLOGIES
MOTOR CARRIERS ROAD/IFTA TAXES
MODEL
Structural
Annual
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
34
FISCAL YEAR RECEIPTS GROWTH
2018-19 992.4 -5.1%
2019-20 954.0 -3.9%
2020-21 1,151.4 20.7%
2021-22 1,126.6 -2.2%
2022-23 1,117.8 -0.8%
2023-24 1,283.1 14.8%
2024-25 1,293.0 0.8%
2025-26 1,357.4 5.0%
2026-27 1,396.6 2.9%
2027-28 1,451.5 3.9%
2028-29 1,488.1 2.5%
2029-30 1,540.5 3.5%
TYPE:
DATA FREQUENCY:
METHOD:
Licenses and Fees estimates are calculated using an average growth rate that is based on historical collection
data. Licenses and Fees are subject to a Consumer Price Index adjustment every other year beginning in 2019-
20.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Licenses and Fees.
MOTOR LICENSE FUND ESTIMATE METHODOLOGIES
LICENSES & FEES
MODEL
Structural
Annual
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
35
FISCAL YEAR RECEIPTS GROWTH
2018-19 0.0 142.3%
2019-20 0.0 -217.5%
2020-21 0.0 -73.5%
2021-22 0.0 116.1%
2022-23 0.0 426.3%
2023-24 0.0 -86.5%
2024-25 0.0 -100.0%
2025-26 0.0 --
2026-27 0.0 --
2027-28 0.0 --
2028-29 0.0 --
2029-30 0.0 --
TYPE:
DATA FREQUENCY:
METHOD:
Estimates are based on historical collections of Minor and Repealed liquid fuels taxes.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Minor and Repealed taxes.
MOTOR LICENSE FUND ESTIMATE METHODOLOGIES
MINOR AND REPEALED
MODEL
Structural
Annual
-0.3
-0.2
-0.2
-0.1
-0.1
0.0
0.1
0.1
0.2
0.2
0.3
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
36
FISCAL YEAR RECEIPTS GROWTH
2018-19 1,687.6 -0.6%
2019-20 1,566.5 -7.2%
2020-21 1,521.1 -2.9%
2021-22 1,595.4 4.9%
2022-23 1,597.7 0.1%
2023-24 1,613.8 1.0%
2024-25 1,567.6 -2.9%
2025-26 1,545.7 -1.4%
2026-27 1,520.3 -1.6%
2027-28 1,497.5 -1.5%
2028-29 1,479.1 -1.2%
2029-30 1,455.2 -1.6%
LABEL TYPE
GAS Dependent
DIESEL Dependent
GALLONS Independent
DRATE Independent
TYPE:
DATA FREQUENCY:
DIFFERENCING:
CASHFLOW:
EQUATIONS:
METHOD:
GASOLINE DIESEL
MODEL: T-STATISTICS: MODEL: T-STATISTICS:
R20.974 β0-1.51 R20.911 β03.61
F248.3 β125.82 F34.3 β15.95
DW 1.88 β2-15.35 DW 1.65 β2-4.14
DF 38 β33.31 DF 35 β3-9.68
N44 β420.41 N44 β44.72
β5-3.64
β64.62
β74.73
β813.18
None
MOTOR LICENSE FUND ESTIMATE METHODOLOGIES
OIL COMPANY FRANCHISE TAX
VARIABLES
DESCRIPTION
Logged monthly gasoline consumption in gallons
Logged monthly diesel fuel consumption in gallons
Logged US highway consumption of gasoline & special fuels
PA tax rate on diesel
MODEL
Vector autoregressive moving average processes with exogenous regressors
Monthly
There are no proposals in the 2025-26 budget that affect OCFT.
Yes, liabilities are cash flowed into fiscal year payments
GAS
t
= -0.5175 + 1.1825 GALLONS
t
- 1.0673 GALLONS
t-4
+ 0.1175 DRATE
t-4
+ 0.9755 GAS
t-4
DIESEL
t
= 2.2852 + 0.3184 GALLONS
t
- 0.3383 GALLONS
t-3
- 0.7729 GALLONS
t-4
+ 0.2160 DRATE
t-4
- 0.2122
GAS t-1 + 0.4432 DIESEL t-1 + 0.2531 GAS t-3 + 0.6511 GAS t-4
Tax rates are applied to monthly motor fuel consumption. The amounts reported above are the non-
restricted portions of the Oil Company Franchise Tax (OCFT) only.
STATISTICS
2025-26 BUDGET PROPOSALS
1,300.0
1,350.0
1,400.0
1,450.0
1,500.0
1,550.0
1,600.0
1,650.0
1,700.0
1,750.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
37
FISCAL YEAR RECEIPTS GROWTH
2018-19 19.7 -65.2%
2019-20 1.0 -94.9%
2020-21 17.9 1690.9%
2021-22 9.8 -44.9%
2022-23 65.7 567.9%
2023-24 108.8 65.6%
2024-25 98.8 -9.2%
2025-26 25.7 -74.0%
2026-27 23.6 -8.2%
2027-28 23.9 1.3%
2028-29 24.0 0.4%
2029-30 24.0 0.0%
TYPE:
DATA FREQUENCY:
METHOD:
Treasury investment income is estimated with historical growth and estimated annual interest rates. Non-
Treasury OMR estimates are calculated using an average growth rate that is based on historical collection
data.
2025-26 BUDGET PROPOSALS
There are no proposals in the 2025-26 budget that affect Other Motor Receipts.
MOTOR LICENSE FUND ESTIMATE METHODOLOGIES
OTHER MOTOR RECEIPTS
MODEL
Structural
Annual
0.0
20.0
40.0
60.0
80.0
100.0
120.0
COLLECTIONS ($M)
FISCAL YEAR
ACTUAL & FORECASTED COLLECTIONS
ACTUAL FORECAST
38
RECENT CHANGES IN TAX LAW
ACT #149 of November 18, 2024 made the following changes:
To Title 75 (the Vehicle Code) of the Pennsylvania Consolidated Statutes.
•
ACT #123 of October 29, 2024 made the following changes:
To the Corporate Net Income Tax:
•
To the Tax Appeals Process:
•
•
•
•
ACT #116 of October 29, 2024 made the following changes:
To the Entertainment Economic Enhancement Program:
•
•
•
•
•
Extends the deadline for a taxpayer to appeal a tax assessment from the Department of Revenue with the Board of Appeals
from 60 to 90 days. Also extends the deadline to appeal the decision of the Board of Appeals to the Board of Finance and
Revenue (BF&R) from 60 days to 90 days. In both cases, the 90 days may be extended by up to 30 days for cause.
The extended deadlines apply to petitions for reassessment of all taxes imposed under Article III, Personal Income Tax:
Personal Income Tax, Personal Income Tax for Fiduciaries, Employer Withholding, Entity Level Assessment, and any
assessment of penalties or interest imposed under Article III. The extended deadlines do not apply to petitions for refund.
Changes the implementation date of the Electric Vehicle Road User Charge from January 1, 2025 to April 1, 2025.
Relocates the Entertainment Economic Enhancement Program from the Tax Reform Code to Title 12.
Permits the deduction of business-related expenses for medical cannabis businesses with a dispensary permit when
calculating Pennsylvania taxable income. At the federal level, the utilization of tax credits or deductions for businesses
engaged in the sale of Schedule 1 controlled substances is prohibitted. The change is effective for tax years 2024 and after.
Adjusted the maximum amount of credit available to individual taxpayers based on their qualified spending and
contributions to qualified charitable corporations.
Makes various administrative changes to the application process.
Provides for BF&R to direct a settlement conference or for either party (department or taxpayer) to request a settlement
process.
Authorizes the department to enter into written agreements related to the liability of a party in a tax dispute.
Creates additional conditions within the definitions of "maintained a place of business" or "maintaining a place of business"
and defines "qualified charitable corporation."
Expands the definitions of class 1 and class 3 venues and adds mutual thrift institutions tax to the definition of "qualified
tax liability."
39
RECENT CHANGES IN TAX LAW
To the Tax Appeals Process (continued):
•
•
ACT #85 of July 17, 2024 made the following changes:
To Title 75 (the Vehicle Code) of the Pennsylvania Consolidated Statutes.
•
•
•
Considers a petition for refund, reassessment, or redetermination to be timely filed if the postmark date is on or prior to
the due date of the petition. The postmark date may now include other forms of delivery service designated by the
Secretary of the Treasury of the United States in addition to the United States Postal Service. This change applies to both
BOA and BF&R.
All changes to the tax appeals process are effective in 90 days.
Creates an Electric Vehicle Road User Charge (EVRUC) for owners or registrants of electric vehicles and plug-in hybrid
electric vehicles with a gross vehicle weight rating of not more than 14,000 pounds.
Sets the EVRUC for electric vehicles at $200 beginning January 1, 2025 and $250 beginning January 1, 2026. On January 1,
2027, the EVRUC for electric vehicles shall be set annually by the Department of Transportation based upon the EVRUC in
the prior year as adjusted to reflect the change in the Consumer Price Index for All Urban Consumers. The EVRUC for plug-
in hybrid electric vehicles is 25% of the EVRUC imposed upon electric vehicles. The EVRUC shall be rounded to the nearest
multiple of $1 as determined by the Department of Transportation.
Exempts taxpayers responsible for the alternative fuels tax on electricity if charging electric or plug-in hybrid electric
vehicles at home and paying the EVRUC.
40
RECENT CHANGES IN TAX LAW
ACT #56 of July 11, 2024 made the following changes:
To the Sales and Use Tax:
•
To the Personal Income Tax:
•
•
•
•
•
•
To the Corporate Net Income Tax:
•
•
•
To the Bank Shares Tax:
•
Provides a deduction from taxable income for student loan interest paid on qualified student loans, not to exceed $2,500
per tax year and not resulting in a taxpayer’s taxable income being less than zero, effective tax year 2025 and after.
Excludes the sale at retail or use of services related to the cleaning or maintenance of a storage trap utilized by a food
service or restaurant establishment to collect grease waste. Exclusions apply to transactions occurring after September 30,
2024.
Excludes from taxable income any distribution already excludable from federal income tax under the Internal Revenue
Code Section 529, effective tax year 2024 and after.
Excludes from taxable income any amount an employee receives through an employer’s matching contribution to the 529
Savings Account Employer Matching Contribution Tax Credit, effective September 9, 2024.
Excludes from taxable income any payments originating from federal or state government, Norfolk Southern Railway, or an
agent thereof, received as a result of the train derailment that occurred in East Palestine, Ohio on February 3, 2023,
effective tax year 2023 and after.
Provides that taxpayers may claim a tax deduction for the percentage depletion of a mine, oil, or gas well, and other
natural deposits on a taxpayer’s property, aligning state law with federal law, effective tax year 2024 and after.
Provides for an annual transfer of $50 million of PIT revenue to the Clean Streams Fund. The initial transfer is to be
completed no later than August 1, 2024, and subsequent transfers are to be completed by August 1.
Permits the deduction of business-related expenses for medical cannabis businesses with an active grower/processor
permit when calculating Pennsylvania taxable income. Tax credits or deductions for businesses engaged in the sale of
Schedule 1 controlled substances are not permitted at the federal level. The change is effective for tax year 2024 and
after.
Provides that an affiliated entity can elect to take a deduction for an addback made by the taxpayer for related party
intangible expenses or related interest expenses, effective tax year 2023 and after.
Increases the net loss usage for any losses generated after December 31, 2024, by ten percentage points annually until it
reaches 80% by tax year 2029. Losses generated in tax year 2024 and prior can still only reduce taxable income up to the
prior cap of 40% of taxable income. Losses generated in tax year 2025 and thereafter may then be used to further reduce
taxable income. The change is effective for tax year 2026 and after.
Provides that institutions may deduct all goodwill generated in a merger or acquisition after June 30, 2001, when that
goodwill is stated in their Reports of Condition filed with the FDIC. Changes are not retroactive and only apply to returns
due March 2025 and after.
41
RECENT CHANGES IN TAX LAW
To the Realty Transfer Tax:
•
To Tax Credit Programs:
•
•
•
•
•
◦
◦
◦
•
◦
◦The contributions that can count toward a tax credit cannot exceed $500 per employee each tax year.
◦The credit can be used against PIT, CNIT, BST, TICST, and MTIT.
Increases the amount transferred from the General Fund to the Housing Affordability & Rehabilitation Enhancement
(PHARE) Fund according to the following schedule, first effective for fiscal year 2024-25:
FISCAL YEAR
TRANSFER
2024-25
$70 million
Eligible employers can claim a tax credit equal to 25% of their contributions, up to $500 per employee each tax
year, matched to funds deposited by employees in PA 529 or PA ABLE accounts.
2025-26
$80 million
2026-27
$90 million
2027-28 and After
$100 million
Increases the Historical Preservation Incentive Tax Credit program cap from $5 million to $20 million, effective for fiscal
year 2024-25 and after.
Increases the Coal Refuse Energy & Reclamation Tax Credit program cap from $20 million to $55 million and increases the
value of each credit from $4.00 to $8.00 per one ton of qualified coal refuse used in the generation of electricity in eligible
facilities. Establishes an individual facility cap of 26.5% of the fiscal year total of credits available, and provides that if
facility is unable to utilize the full number of credits due to them because of the 26.5% restriction, the remaining balance
will be prorated. All changes are effective for fiscal year 2024-25.
Increases the Neighborhood Assistance Program cap from $36 million to $72 million and made various changes to the
limitations in program segments, effective for fiscal year 2024-25 and after.
Permits the Department of Community and Economic Development (DCED) to allow additional investment authority within
the Rural Jobs & Investment Tax Credit program, totaling $50,000,000 for investment authority beginning July 1, 2024, and
allowing for an additional $50,000,000 in investment authority, effective fiscal year 2024-25 and after.
Creates the 529 Savings Account Employer Matching Contribution Tax Credit, allowing employers to claim tax credits
against state tax liability for making matching contributions to employees’ PA 529 or PA ABLE accounts. Contributions are
not considered taxable income for employees. The credit is effective for tax years 2025 through 2029.
In order to receive the credit, employers must provide proof to the department that the employer has made
qualifying matching contributions to employee-owned accounts.
The credit can be used against PIT, CNIT, BST, Title Insurance Companies Shares Tax (TICST), Insurance
Premiums Tax (IPT), and Mutual Thrift Institutions Tax (MTIT).
Creates the Employer Child Care Contribution Tax Credit, allowing employers to claim tax credits against their state tax
liability for making contributions toward an employee’s eligible child-care costs. The credit is first effective for tax year
2025.
Eligible employers can claim a tax credit equal to 30% of their contributions toward the child-care expenses of
their workers. This benefit must be available to all employees at an equal amount during the taxable year.
42
RECENT CHANGES IN TAX LAW
To the Computer Data Center Equipment Incentive Program:
•
To Tuition Account Programs:
•
To City Revitalization Improvement Zones:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Adds requirements for the State zone reports filed with DOR by each qualified business and allows DOR to provide that
information to DCED.
Eliminates the exemption from sales and use tax for data center equipment purchased for “Proof of Work Crypto-Asset
Mining,” effective beginning in tax year 2026.
Prohibits the Treasury Department from imposing a termination fee in the event that an account is terminated due to an
account beneficiary’s disability or death. Additionally, payments received from the remaining value of the account are
excluded from taxable income for PIT purposes. Changes are effective for tax year 2024 and after.
Amends the definition of "city" to explicitly include home rule cities meeting the population threshold and excludes cities
designated as distressed under Act 47, effective immediately.
Amends the definition of “City Revitalization and Improvement Zone” to allow a zone to encompass one or more
contiguous municipalities, effective immediately.
Expands eligible taxes for zones designated after July 1, 2024, to include Insurance Premiums Tax, apportioned to the
amount attributable to a location within the zone, effective immediately.
Requires DCED to establish application deadlines on its website and provides that applicants not approved may reapply.
Amends the definition of "pilot zone," clarifying that it applies to an area designated prior to July 1, 2024, effective
immediately.
Sets membership requirements for contracting authority board members for zones established after July 1, 2024, effective
immediately.
Provides for the approval of up to four additional zones: up to two with populations between 7,000 and 19,999 , and up to
two zones for one or more cities or municipalities with a population of 20,000 or more. Populations are based on the most
recent federal decennial census, effective immediately.
Provides for a zone located in a city of the third class incorporated under optional charter which is located in a home rule
county of the third class, is its county's seat and has a population of between 93,500 and 95,500 based on the 2020 federal
decennial census approved in the first year after the effective date of the legislation.
Sets a maximum transfer amount of $15 million from the General Fund for any new zones and provides for annual
increases in the maximum amount based on CPI beginning July 1, 2025.
Removes the borrowing provisions from the General Fund should the transferred revenue not be sufficient to cover debt
service.
Allows CRIZ authorities to retain up to $3 million of carryover funds for a five-year period for zones designated after July 1,
2024. Beginning in year six, also sets parameters on if money needs to be returned by the zone to the Commonwealth for
deposit into the General Fund for zones designated prior to July 1, 2024.
Sets parameters and approval criteria on the transferring of parcels within a zone.
Requires a review report of the program by the Administration to the General Assembly every March 31.
43
RECENT CHANGES IN TAX LAW
ACT #54 of July 11,2024 made the following changes:
To the Fiscal Code:
•
•
Provides for the extension of the transfer of revenues from the Cigarette Tax to the Tobacco Settlement Fund for fiscal year
2024-25.
Provides for the transfer of $9,944,000 to the Environmental Stewardship Fund from Personal Income Tax revenue for
fiscal year 2024-25.
44
RECENT CHANGES IN TAX LAW
ACT #55 of July 11, 2024 made the following changes:
To the Education Improvement Tax Credit:
•
To the Opportunity Scholarship Tax Credit:
•
Increases the program cap to $540 million, effective for tax year 2024-25.
Increases the program cap to $90 million, effective for tax year 2024-25.
45
RECENT CHANGES IN TAX LAW
ACT #64 of December 14, 2023 made the following changes:
To the Personal Income Tax:
•
To the Qualified Manufacturing Innovation and Reinvestment Deduction:
•
•
•
•
Provides that personal income received by a resident trust, and the classes of income received by a nonresident trust from
sources within this Commonwealth, shall be taxable to the grantor of the trust or another person to the extent the grantor
or other person is treated as the owner of the trust under sections 671, 672, 673, 674, 675, 676, 677, 678 and 679 of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended, whether or not such income is
distributed or distributable to the beneficiaries of the trust or accumulated.
Lowers the minimum private capital investment from $60 million to $50 million.
Changes the maximum allowable deduction to 25 percent for taxpayers investing greater than $50 million and less than or
equal to $100 million.
Establishes required timelines for project completion and the completion of administrative requirements, depending on
the level of private capital investment.
Changes apply to tax years beginning 2024 and after.
46
RECENT CHANGES IN TAX LAW
ACT #34 of December 13, 2023 made the following changes:
To the Fiscal Code:
•
•
•
•
•
•
•
•
•
Provides for the extension of the transfer of revenues from the Cigarette Tax to the Tobacco Settlement Fund for fiscal year
2023-24.
Excludes amounts paid or incurred by an employer of an employee for dependent care assistance provided to the employe
that are excludable under 26 U.S.C. § 129 (relating to dependent care assistance programs) from Personal Income Tax.
Increases the Child and Dependent Care Enhancement Tax Credit from 30 percent of the federal credit to 100 percent of
the federal credit, effective for tax year 2023.
Provides for additional Keystone Opportunity Expansion Zones.
Repeals the provisions for the Enhanced Revenue Collection Account.
Provides for the transfer of $10,538,000 to the Environmental Stewardship Fund from Personal Income Tax revenue for
fiscal year 2023-24.
Provides for the transfer of $4,000,000 to the Surface Mining Conservation and Reclamation Fund from Personal Income
Tax revenue for fiscal year 2023-24.
Provides for the transfer of $31,900,000 to the General Fund from the Medical Marijuana Program Fund for fiscal year
2023-24.
Makes permanent the annual transfer to the Sports Marketing and Tourism Account an amount equal to 5% of Sports
Wagering Tax revenue, or $2,500,000, whichever is greater, but not to exceed $5,000,000.
47
RECENT CHANGES IN TAX LAW
ACT #33 of December 13, 2023 made the following changes:
To the Education Improvement Tax Credit:
•
To the Opportunity Scholarship Tax Credit:
•
Increases the program cap to $470 million, effective for tax year 2023-24.
Increases the program cap to $85 million, effective for tax year 2023-24.
48
RECENT CHANGES IN TAX LAW
ACT #7 of August 4, 2023 made the following changes:
To the Property Tax Rent Rebate Program:
•
•
•
Increases the maximum eligibility income to $45,000 from $35,000 for owners and $15,000 for renters.
Increases maximum rebates at all eligibility income levels according to the schedule below for claim year 2023:
HOUSEHOLD ELIGIBILITY
INCOME
MAXIMUM OWNER
REBATE
MAXIMUM RENTER
REBATE
$0 - $8,000
$1,000
$1,000
$8,001 - $15,000
$770
$770
Provides that eligibility income and supplement parameters will increase annually according to the Consumer Price Index
(CPI) for All Urban Consumers statistics published by the United States Bureau of Labor Statistics, rounded to the nearest
$10. In the case of a decline in CPI, eligibility income limits will remain the same.
$15,001 - $18,000
$460
$460
$18,001 - $45,000
$380
$380
49
RECENT CHANGES IN TAX LAW
ACT #108 of November 3, 2022 made the following changes:
To the Personal Income Tax:
•
2024 2025 2026 2027 2028
$9,500 $11,000 $14,000 $17,000 $20,000
To the Realty Transfer Tax:
•
To the Pennsylvania Economic Development for a Growing Economy (PA EDGE) Tax Credit Program:
•
•
•
•
Changes the thresholds at which taxpayers are required to make estimated payments according to the schedule below:
TAX YEAR
2023 and Prior
2029 and Forward
THRESHOLD
$8,000
Prior Year + $500
Increases the transfer to the Housing Affordability and Rehabilitation Enhancement Fund from $40 million to $60 million,
effective for fiscal years beginning July 1, 2023, and after.
Incorporates the existing Local Resource Manufacturing Tax Credit into the PA EDGE program, and increases the amount of
credits available in a fiscal year to $56.7 million, effective for taxable years beginning after December 31, 2022.
Creates a credit for qualified Pennsylvania milk processing facilities meeting facility and employment requirements of up to
$15 million per fiscal year, effective for taxable years beginning after December 31, 2022.
Creates a credit for qualified regional clean hydrogen hubs meeting facility and employment requirements of up to $50
million per fiscal year, effective for taxable years beginning after December 31, 2022.
Creates a credit for qualified facilities engaged in semiconductor manufacturing and biomedical manufacturing and
research, meeting facility and employment requirements. Up to $10 million in credits are available each fiscal year for
semiconductor manufacturing, and up to $10 million in credits are available for biomedical manufacturing and research,
effective for taxable years beginning after December 31, 2022.
50
RECENT CHANGES IN TAX LAW
ACT #53 of July 8, 2022 made the following changes:
To the Corporate Net Income Tax:
•
2023 2024 2025 2026 2027 2028 2029 2030 2031
8.99% 8.49% 7.99% 7.49% 6.99% 6.49% 5.99% 5.49% 4.99%
•
•
To the Insurance Premiums Tax:
•
•
To the Personal Income Tax:
•
•
To the Sales and Use Tax:
•
•
To the Table Games Tax:
•
To the Dependent and Child Care Enhancement Program:
•
Codifies the Department of Revenue-issued Corporation Tax Bulletin 2019-04, related to economic nexus, ensuring that
businesses that are operating in Pennsylvania’s economic marketplace, but located out of state, are subject to Pennsylvania
taxation in a similar manner to businesses with physical operations in Pennsylvania.
Decreases the corporate net income tax rate according to the schedule below:
TAX YEAR
CNIT RATE
Codifies market sourcing rules applicable to intangible related receipts and provides specific guidance to taxpayers
regarding how to source various items of intangible income. These include sourcing of royalties on intangibles used in
Pennsylvania, such as patents and trademarks; sourcing of interest associated with loans to purchase land and buildings;
sourcing of interest associated with vehicle loans; sourcing of credit card interest and fees; and a mechanism to handle all
other types of intangible receipts.
Provides that tax revenue from table games shall be deposited into the General Fund, rather than the Property Tax Relief
Fund, effective July 1, 2022. The Title 4 provision under §13A62(C), which required the transfer to the Property Tax Relief
Fund when the Budget Stabilization Fund balance was higher than $750 million, was repealed.
Establishes the Pennsylvania Dependent and Child Care Enhancement Tax Credit, which creates a refundable personal
income tax credit calculated at 30% of the federal child and dependent care tax credit for those who qualified for the
federal program.
Deposits all insurance premiums tax revenues in the General Fund and provides from transfers to the Municipal Pension
Aid Fund (MPAF) and the Fire Insurance Tax Fund (FITF).
The FITF will receive the greater of 8.5% of fiscal year insurance premiums tax revenues or $85 million. The MPAF will
receive the greater of 38% of fiscal year insurance premiums tax revenues or $345 million.
Permits Section 179 property placed into service after December 31, 2022, to be treated as a deductible expense only to
the extent allowable under Section 179 of the Internal Revenue Code, which currently is set at $1 million. Pennsylvania will
follow all future federal changes to Section 179 automatically.
Allows the deferral of tax due on gains from like-kind exchanges of property, effective January 1, 2023.
Applies the sales and use tax to sales at retail or use of peer-to-peer car-sharing programs, beginning January 1, 2023.
Expands the window of benefits received by certified data centers under the sales and use tax exemption program from 15
to 25 years.
51
RECENT CHANGES IN TAX LAW
To Airport Land Development Zones:
•
•
To City Revitalization and Improvement Zones:
•
•
To the Neighborhood Improvement Zone:
•
To the Keystone Opportunity Expansion Program:
•
To the Keystone Opportunity Zone Program:
•
•
•
To the Waterfront Development Tax Credit:
•
To the Research and Development Tax Credit:
•
To the Entertainment Economic Enhancement Program:
•
Strengthens confidentiality provisions on usage of taxpayer data supplied to the authority from the department.
Established Airport Land Development Zones and their corresponding tax credits. The program will be administered by the
Department of Community and Economic Development.
The tax credit shall be equal to $2,100 for each full-time equivalent employee in excess of the number of full-time
equivalent employees prior to January 1, 2021. Credits may be applied against personal income (excluding employer
withholding), corporate net income, bank and trust company shares, title insurance companies shares, and mutual thrift
institutions taxes. The amount of credit per job may not be changed by the legislature before June 30, 2025.
Requires DOR to notify each contracting authority of all CRIZ report non-filers and strengthens confidentiality provisions on
usage of taxpayer data supplied to the authority from the department.
Permits a CRIZ authority to provide financial assistance in the form of a grant.
Increases the fiscal year program cap to $24 million from $8 million, effective for fiscal year 2022-23. The act further
provides that the program cap may not be changed by the legislature before June 30, 2025.
Extends the application deadline for the additional zones from October 1, 2022, to October 1, 2023 ,and extends the
approval deadline from December 31, 2022, to December 31, 2023.
Permits qualified businesses that receive an additional 10 years of KOZ benefits to extend the benefits to affiliates located
within the same zone.
Provides that any affiliate of a qualified business located within a zone that relocates to the same zone will also qualify for
the program.
Provides that extensions will remain in effect if the original business that made the investment and jobs moves out of the
zone if an affiliate remains.
Increases the fiscal year program cap to $5 million from $1.5 million, effective for fiscal year 2022-23, and provides that the
program cap may not be changed by the legislature before June 30, 2025.
Increases the fiscal year program cap to $60 million from $55 million, effective for fiscal year 2022-23, and maintaining the
same 80/20 split for small businesses. The act further provides that the program cap may not be changed by the
legislature before June 30, 2025.
52
RECENT CHANGES IN TAX LAW
To the Film Production Tax Credit:
•
•
•
To the Inheritance Tax:
•
To the Public Transportation Assistance Fund:
•
•
Modifies the rate schedule for rentals of less than a day. The $1.25 fee now applies to rentals of more than three but less
than six hours; the $2.00 fee applies to rentals of 6 hours or more.
Amends the definition of "multifilm production" and allows productions meeting this definition to submit alternative films
to maintain contracts under the program.
Increases the fiscal year program cap to $100 million from $70 million, effective for fiscal year 2022-23. The act further
provides that the program cap may not be changed by the legislature before June 30, 2025.
Sets aside $5 million of the program cap for productions by Pennsylvania film producers. If the full allocation for PA film
producers is not used, the credits may be made available to any approved applicant.
Provides that transfers of property at death by a member of the military on active duty shall be exempt from inheritance
tax, effective September 6, 2022.
Subjects peer-to-peer car sharing programs to the car sharing daily fee.
53
RECENT CHANGES IN TAX LAW
ACT #54 of July 11, 2022 made the following changes:
To the Fiscal Code:
•
•
•
•
•
•
Provides for the transfer to the Sports Tourism and Marketing Account an amount equal to 5% of Sports Wagering Tax
revenue, or $2,500,000, whichever is greater, but not to exceed $5,000,000, for fiscal year 2022-23.
Approves a one-time supplemental rebate from property tax/rent rebate program claimants who received a rebate in claim
year 2021. The one-time supplemental rebate is in addition to the original approved rebate and shall be equal to 70% of
the claimant’s previously approved claim amount for the 2021 PTRR claim year.
Provides for the extension of the transfer of revenues from the Cigarette Tax to the Tobacco Settlement Fund for fiscal year
2022-23.
Provides for the transfer of $12,317,000 to the Environmental Stewardship Fund from Personal Income Tax revenue for
fiscal year 2022-23.
Provides for the annual transfer of $45,000,000 to the Election Integrity Restricted Account from Personal Income Tax
revenue. The first transfer must occur by August 1, 2022, and future transfers must occur annually by August 1.
Makes changes to the terms and qualifications for board members of a Military Installation Remediation Project authority
and strengthens confidentiality provisions on usage of taxpayer data supplied to the authority from the department.
54
RECENT CHANGES IN TAX LAW
ACT #55 of July 8, 2022 made the following changes:
To the Public School Code:
•
•
Increases the fiscal year program cap for the Education Improvement Tax Credit to $340 million from $225 million,
effective for fiscal year 2022-23.
Increases the fiscal year program cap for the Education Opportunity Scholarship Tax Credit to $65 million from $55 million,
effective for fiscal year 2022-23.
55
RECENT CHANGES IN TAX LAW
ACT #49 of July 7, 2022 made the following changes:
To Small Games of Chance:
•
ACT #74 of July 11, 2022 made the following changes:
To the Fireworks Law:
•
•
•
◦
◦
◦
◦
◦
◦
◦
◦
◦
•
$1.5 million to the EMS Grant Program
Extends the ability of club licensees to utilize proceeds from small games of chance for operating expenses without
following the 60/40 split until December 31, 2022.
Removes the Fireworks Tax provisions from the Tax Reform Code and moves them to Title 3.
Changes the calculation of the fireworks tax, which is now calculated on the purchase price only, rather than after sales and
use tax has been applied.
Provides that fireworks tax revenues no longer remain in the General Fund and will instead be transferred to the following
programs:
$500,000 to Office of the State Fire Commissioner for FBI-Accredited PA Bomb Squad Reimbursement
Any remaining money shall be equally divided and transferred to the EMS Grant Program and the Fire Company
Grant Program
Provides that fireworks tax revenue will remain in the General Fund for 2022-23 and be subject to the new transfers in
fiscal year 2023-24.
$250,000 to the Online Training Educator and Training Reimbursement Account
$1 million to PHEAA for Loan Forgiveness and Tuition Assistance to active volunteer firefighters and volunteer
EMS providers
$1 million to Department of Health for EMS Training
$500,000 to Office of the State Fire Commissioner for Emergency Services Training Center Capital Grants
$500,000 to Office of the State Fire Commissioner for Career Fire Dept. Capital Grants
$250,000 to Office of the State Fire Commissioner for Public Safety Campaign
56
RECENT CHANGES IN TAX LAW
ACT #10 of April 22, 2021 made the following changes:
To the Tax Reform Code:
•
•
Directs the Department of Revenue to disregard the period after April 14, 2021, and before May 17, 2021, in the
calculation of interest, a penalty or an addition to tax for failure to meet an extended deadline for Personal Income Tax, in
light of tax administration challenges due to the COVID-19 pandemic.
Provides various clarifications on filing deadlines for Corporate Net Income Tax, in light of tax administration challenges due
to the COVID-19 pandemic.
57
RECENT CHANGES IN TAX LAW
ACT #24 of June 30, 2021 made the following changes:
To the Fiscal Code:
•
•
•
Provides that any information gained by any administrative department, board, or commission providing for credits as
administered by the Department of Revenue independently or in conjunction with other agencies or revenue transfers to
improvement or economic development zones shall be confidential except for official purposes. This does not include
information regarding the amount of refunds or credits and the identity of the entitled persons or corporations.
Provides for the extension of the transfer of revenues from the Cigarette Tax to the Tobacco Settlement Fund for fiscal year
2021-22.
Provides for the transfer of $12,289,000 to the Environmental Stewardship Fund from Personal Income Tax revenue for
fiscal year 2021-22.
58
RECENT CHANGES IN TAX LAW
ACT #25 of June 30, 2021 made the following changes:
To the Sales and Use Tax:
•
•
•
•
•
To the Personal Income Tax:
•
•
•Makes technical clarifications to conform the Tax Reform Code with the new Federal form 1099-NEC.
To the Corporate Net Income Tax:
•
To the Bank and Trust Company Shares Tax:
•
To the Table Games Tax:
•
Provides that the sale at retail of tangible personal property manufactured for the purpose of initiating, supporting, or
sustaining breast feeding is exempt from sales and use tax, effective for sales after December 31, 2021.
Provides that, effective 60 days from passage, the sale at retail of flight simulators, training materials, and corresponding
software, and the lease of helicopters and similar rotocraft are exempt from sales and use tax.
Provides that the sale at retail of multipurpose agriculture vehicles used in farming is exempt from sales and use tax,
effective for sales at retail or uses after December 31, 2021.
Ends the current Computer Data Center Equipment Incentive Program. Tax refunds cannot be issued by the Department of
Revenue under the program for the tax imposed upon the sale or use of computer data center equipment purchased after
December 31, 2021.
Replaces the Computer Data Center Equipment Incentive Program with the Computer Data Center Sales and Use Tax
Exemption Program. Beginning January 1, 2022, certified entities can annually submit for a sales and use tax certificate of
exemption for purchased computer data center equipment used exclusively in the data center certified by the state.
Allows farmers to defer income received from disaster-related crop insurance payments for one year, mirroring federal
law, applicable to taxable years beginning after December 31, 2020.
Requires that personal income tax payments equal to or greater than $15,000 must be made electronically, applicable to
payments made after December 31, 2021. Payments not made electronically will be subject to a penalty equaling 3% of
the payment amount not to exceed $500.
Provides that the qualified manufacturing and reinvestment deductions shall be applied to the taxable income of a
taxpayer to reduce the taxpayer’s qualified tax liability following the allocation and apportionment of income, applicable to
tax years beginning after December 31, 2020.
Provides that the income of two or more banking institutions shall be combined on income statements of Reports of
Condition in the event of mergers or acquisitions.
Removes the sunset date on the additional 2% state tax on casino table games, making permanent the total 14% state tax
on table games.
59
RECENT CHANGES IN TAX LAW
To the Bad Check Fees:
•
To the Keystone Innovation Zone Program:
•
•
•
To the Keystone Opportunity Zone Program:
•
•
To the Local Resource Manufacturing Tax Credit:
•
To the Mixed-Use Development Tax Credit:
•
To the Pennsylvania Housing Tax Credit:
•
To the Research and Development Tax Credit:
•
•
•
To the Film Production Tax Credit:
•
Extends the application and approval deadlines for the Additional Keystone Opportunity Expansion Zones, authorized
under Act 13 of 2019, from October 1, 2021 to October 1, 2022 and from December 31, 2021 to December 31, 2022,
respectively.
Changes the maximum fee assessed on bad checks decreases from $1,000 to $100, effective 120 days after passage of the
Act.
Moves the application deadline from September 15 of each year for prior taxable year to December 1 for prior tax year.
Moves the certificate award deadline from December 15 of each year to May 1 of each year following calendar year of
application.
Moves the report deadline from December 31 of each year to October 1 of each year following calendar year of
application.
Moves the annual report from March 15 of the following calendar year to October 1 of the following calendar year.
Permits the award of credits to multi-film projects now within the program, if produced by the same taxpayer over a period
of no less than one year and no more than four years and permits the Department of Revenue to reissue tax credits only
after allowing taxpayers 90 days to submit applications for alternative individual films.
Allows the Department of Community and Economic Development may grant a five-year extension for a Keystone
Opportunity Zone located within a county of the third class with a population between 350,000 and 410,000.
Reduces the maximum number of Local Resource Manufacturing Tax Credit recipients from four to two. Additionally, the
department can now award unallocated credits to no more than one taxpayer if additional capital investment and job
requirements are met.
Increases the total aggregate amount of tax credits available in any fiscal year from $3 million to $4.5 million.
Makes an appropriation of $10 million to the credit, effective for fiscal year 2021-22.
Moves the application deadline from September 15 to December 1.
Moves the deadline for department approval from December 15 of the calendar year to May 1 of the second calendar year
following the close of the taxable year during which the expense was incurred.
60
RECENT CHANGES IN TAX LAW
To the Entertainment Economic Enhancement Program:
•
•
•
•
To the Administration of Tax Credit Programs:
•
•
•
•
•
•
•
Permits the Department of Revenue is to require electronic filing for applications for tax credits or tax benefits, effective
within 30 days of the bill's passage.
Allows unallocated credits to be carried forward to the next program year.
Expands the parameters of eligible concert tour equipment, tour expenses, and qualified taxpayers.
Permits streaming performances to be eligible under the PA Live Events Industry Covid-19 Emergency Assistance Program
for fiscal years beginning on July 1, 2021 and ending June 30, 2023.
Expands eligible venues to include qualified rehearsal facilities when used for streaming performances beginning on July 1,
2021 and ending June 30, 2023.
Provides that the department may require the submission of additional documentation and verification, in-person or
virtual interviews, and site inspections, effective within 30 days of the bill's passage.
Empowers the department to develop risk-scoring criteria for applications for tax credits or tax benefits, effective within 30
days of the bill's passage.
Permits the department to issue assessments against taxpayers in the event of improper use or conferring of tax credits or
tax benefits and may be represented in all petition-related proceedings, , effective within 30 days of the bill's passage.
Requires tax credit brokers to register and post $50,000 bond with the Department of Revenue Brokers also face a civil
fine of up to $25,000 for the first offense and $50,000 for each additional offense if broker registration requirements are
violated. Fines are payable to the Department of Revenue. The provisions are effective 180 days from the bill's passage.
Expands reporting requirements to allow for greater transparency. Taxpayers shall report annually to the Department of
Revenue or the administering agency after approval and until the tax credit or tax benefit is fully used. Additionally, the
Department of Revenue or administering agency is required to provide taxpayer data on the utilization of tax credits or tax
benefits to the Independent Fiscal Office, if applicable.
Puts in place an appeals process for taxpayers, brokers, and the Department of Revenue concerning the administration of
tax credits and tax benefits.
61
RECENT CHANGES IN TAX LAW
ACT #26 of June 30, 2021 made the following changes:
To the Public School Code:
•
•
Increases the total aggregate amount of all tax credits approved for contributions from business firms to scholarship
organizations, educational improvement organizations, and pre-kindergarten scholarship organizations in a fiscal year from
$185 million to $225 million.
Increases the minimum amount of the total aggregate amount to be used to provide tax credits for contributions from
business firms to scholarship organizations from $135 million to $175 million.
62
