By Melissa Daniels | PA Independent
HARRISBURG – Legislation to nix Pennsylvania’s inheritance tax on small family-owned businesses is making progress in the state Senate.
A bill to create the exemption, sponsored by Senate Majority Leader Dominic Pileggi, R-Delaware, passed unanimously out of the Senate Finance Committee Wednesday morning.
Pennsylvania’s inheritance tax applies to assets transferred from a decedent to their child, sibling or other relative. Rates range from 4.5 percent to 15 percent on all qualifying assets, depending on the heir’s relationship to the deceased.
Pileggi called the legislation “a fairly simple bill” and said it “protects small businesses from pressures of liquidation” in order to satisfy the state tax.
The proposed exemption would apply to family-owned business with 50 employees or less and annual net revenue of less than $5 million. Those who receive the exemption must retain the business seven years to qualify.
Pileggi, according to staff, intends to see the legislation passed before the next fiscal year begins on July 1. Department of Revenue estimates put the loss at about $3.8 million in the first year.
In committee, the bill received bipartisan support. State Sen. John Blake, D-Lackawanna, said he appreciated the provision that requires recipients to retain the business. And while the effect on the state budget is “nominal,” the inheritance tax can be “an enormous issue for small businesses that would otherwise be affected.”
A similar measure is moving through the House of Representatives, sponsored by state Rep. Stephen Bloom, R-Cumberland. That bill’s language does not include the definition of small business that is included in Pileggi’s bill.
Bloom’s bill specifies that family members must maintain the business for at least five years to qualify for the exemption.
Contact Melissa Daniels at [email protected]