HOW ARE CORPORATIONS TAXED IN PENNSYLVANIA?
CORPORATE NET INCOME TAX Corporations doing business in Pennsylvania are subject to Pennsylvania’s Corporate Net Income Tax at a rate of 9.99%. This tax is levied on federal taxable income, without the federal net operating loss deduction. Pennsylvania allows a ten-year net operating loss carry forward of up to $1 million a year. To arrive at Pennsylvania taxable income, all taxes imposed on or measured by net income which are expensed on the federal corporate income tax return are added back, while the foreign dividend gross-up and net interest income and gains on United States government securities are deducted. In addition, consolidated or combined reporting is not allowed. Pennsylvania views each company as a separate company for Corporate Net Income Tax purposes. For corporations whose entire business is not transacted in Pennsylvania, the income base may be allocated and apportioned to determine income subject to taxation in Pennsylvania. For corporations which conduct activity i
