HARRISBURG – State Rep. Dallas Kephart (R-Cambria/Clearfield) highlighted Wednesday the Net Operating Loss (NOL) tax reform provisions that recently passed into law as part of a package bill.
NOLs allow businesses to carry forward losses incurred during a taxable year into future tax years. This provision allows the losses to be deducted from future profits to reduce an employer’s overall long-term tax liability.
NOL reform encourages businesses to make expenditures now. Then, the businesses may deduct their current losses when their returns start coming in, and they have more tax liability.
“This reform marks a win that I have been advocating for since being elected to office,” shared Kephart. “NOLs will help businesses invest and hire more people in Pennsylvania.
“Last year, I had stand-alone amendments to a bill with this NOL provision that passed with overwhelming bipartisan support in the House of Representatives,” continued Kephart.
“I am proud to have worked with my colleagues on this beneficial tax policy. I look forward to continuing to create an economic environment that encourages businesses to invest in Pennsylvania to generate more jobs and economic growth. There is a lot more work to do.”
With the passage of this provision, Pennsylvania will now align with the federal tax rules and 48 other states after it goes into full effect in a few years (it is a 10 percent increase per year from 40 percent) when it hits the 80 percent deduction cap.