Pa. Senate’s Proposed Tax Cuts Would Save Families $900 Per Year

Harrisburg, Pa., May 29, 2024 — Senate Bill (SB) 269 would slash taxes across Pennsylvania and save the average family of four $400 in fiscal year (FY) 2024–25 and $900 in FY 2025–26, according to the Commonwealth Foundation’s latest analysis. The legislation would cut the Personal Income Tax (PIT) rate from 3.07 percent to 2.8 percent beginning in January 2025 and eliminate the Gross Receipts Tax on electricity.

According to the Independent Fiscal Office (IFO), Pennsylvania’s working-age population will decline by 4.3 percent by 2030. Fewer working adults will support a growing number of seniors, resulting in lower tax revenues and higher costs for long-term care programs.

“Pennsylvania is facing a demographic crisis with a shrinking workforce that will severely strain the state’s finances in the coming years,” said Elizabeth Stelle, director of policy analysis at the Commonwealth Foundation. “Enacting responsible tax cuts now is crucial to attracting and retaining jobs, empowering working families, and boosting economic growth.”

SB 269’s proposed 9 percent reduction to the PIT rate would improve Pennsylvania’s ranking to the 10th lowest individual income tax rate in the nation. Eliminating the 59-mill Gross Receipts Tax on electricity sales would provide additional savings for families by removing a surcharge currently passed on to consumers.

“While Governor Shapiro’s proposed budget increases spending, raises energy costs, and creates a structural deficit of more than $6 billion, the Senate Republican tax cut plan offers targeted tax relief to make Pennsylvania more attractive for workers and small businesses,” Stelle said. “Along with spending restraint, these tax cuts are vital first steps toward confronting our economic and demographic headwinds.”

The Commonwealth Foundation’s analysis also determined that Pennsylvania can further improve its economic standing by eliminating the startup penalty on small businesses. Enacting net operating loss reforms would encourage more business startups throughout the state.

Stelle continued: “For too long, Pennsylvania has been losing residents and jobs to other states with more favorable tax climates. SB 269 moves us in the right direction by letting working families keep more of their hard-earned money. The General Assembly should make these tax cuts a priority.”

View the full fact sheet on the proposed tax reductions here.

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The Commonwealth Foundation turns free-market ideas into public policies, fostering prosperity for all Pennsylvanians.