Pennsylvania - New law broadens taxation of banks, financial institutions 

July 18:  Pennsylvania Governor Corbett on July 9, 2013, signed into law Pennsylvania House Bill 465 which makes significant changes in the tax laws relating to financial institutions.

Concerning financial institutions—

  • Effective for the calendar year beginning January 1, 2014, the new law significantly revises the way financial institutions apportion income to Pennsylvania.
  • The new law will subject to tax many financial institutions that currently do not have a physical presence in Pennsylvania and are not considered to have a tax liability under the economic nexus provisions in the current law.
  • The law expands the definition of financial “institution” and resolves an issue relating to the tax base following a merger of two banks.

On a positive note, the new law reduces the tax rate from 1.25% to 0.89%.

Read a July 2013 report [PDF 130 KB] about the new legislative provisions, prepared by KPMG LLP.

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