HARRISBURG – Legislation including an initiative sponsored by Senate Majority Leader Dominic Pileggi (R-9) to eliminate Pennsylvania’s inheritance tax – commonly referred to as the “death tax” – on small businesses has been sent to Governor Tom Corbett, who is expected to sign it into law.
“The number one issue in Pennsylvania right now is jobs, and most jobs are created by small and medium-sized businesses,” Senator Pileggi said. “The fastest way to break up a successful small business is to impose a tax when the owner dies and that business is transferred to the family. Under current law, the family is often forced to sell the company, or borrow money, just to pay the death tax.”
Earlier this year, Senator Pileggi introduced Senate Bill 303 because, he said, “we should exempt family-owned, small businesses from the death tax so they can pass the business down to the next generation.”
Under the new law, businesses with 50 or fewer employees and a net book value of assets of less than $5 million will be exempt from the state inheritance tax, which is currently 4.5% for lineal heirs and 12.0% for siblings. To qualify for the exception, a business must continue to be operated as a family business for at least seven years following the transfer.
Senator Pileggi’s legislation, which is supported by the National Federation of Independent Businesses, the Pennsylvania Chamber of Business & Industry, and the Pennsylvania Manufacturers’ Association, was included in an amendment to House Bill 465, which contains numerous amendments to Pennsylvania’s tax code.
Similar legislation sponsored by Senator Pileggi to exempt family farms from the inheritance tax was enacted last year.
More information about state issues is available at Senator Pileggi’s website, www.SenatorPileggi.com, on Facebook at www.facebook.com/SenatorPileggi, or on Twitter at twitter.com/SenatorPileggi.