HARRISBURG – Legislation introduced by Senate Majority Leader Dominic Pileggi (R-9) to eliminate the state death tax on small businesses was unanimously approved today by the Senate Finance Committee.
“The number one issue in Pennsylvania right now is jobs, and most jobs are created by small and medium-sized businesses,” Senator Pileggi said. “The fastest way to break up a successful small business is to impose a tax when the owner dies and tries to transfer that business to his family. Under current law, the family is often forced to sell the company, or borrow money, just to pay the death tax.”
Senator Pileggi said he introduced Senate Bill 303 because “we should exempt family-owned, small businesses from the death tax so they can pass the business down to the next generation.”
His legislation will exempt businesses with 50 or fewer employees, and a net book value of assets of less than $5 million, from the state inheritance tax, which is currently 4.5% for lineal heirs and 12.0% for siblings. To qualify for the exception, a business must be at least 75 percent owned by a family, and it must continue to be operated as a family business for at least seven years following the transfer.
Legislation sponsored by Senator Pileggi to exempt family farms from the inheritance tax was enacted last year. “It’s time to extend that to small businesses,” he said.
Senate Bill 303 has a bipartisan list of co-sponsors and is supported by the National Federation of Independent Businesses, the Pennsylvania Chamber of Business & Industry, and the Pennsylvania Manufacturers’ Association.