Pennsylvania: The Keystone State

Pennsylvania is located in the eastern United States. The state is assigned to the mid-Atlantic states and is one of the thirteen founding states of the USA. The Keystone State covers an area of ​​almost 120,000 km². According to ehuacom, more than 12.5 million people live in Pennsylvania and the capital is Harrisburg.

Pennsylvania Location Map

TRADITIONAL KEY INDUSTRIES

Pennsylvania’s renowned agribusiness is one of the leading economic drivers. Quality products such as food and hardwood are produced here. High-quality soils, the variety of crops, close partnerships with universities and the agricultural tradition, coupled with a strategic location and extensive infrastructure and logistics systems make Pennsylvania an ideal location for agro-industrial companies.

The production also has a long tradition. Pennsylvania steel has been used in the construction of well-known American landmarks such as the Golden Gate Bridge, the Empire State Building and the Hoover Dam. Today, the industry focus is on advanced additives, high-tech and digital strategies to meet the needs of modern businesses and consumers. Companies that focus on medical devices or organic food can be found here, as well as those producing nanomaterials and processed metal products.

Natural gas production, primarily from the Marcellus Shale, has exceeded five billion cubic feet in each of the past few years, making Keystone State the second-largest national gas producer. Pennsylvania is among the top three energy exporters in the United States and has cemented its position as a major net exporter of energy.

BUSINESS PROMOTION PROGRAMS

The Keystone Innovation Zone (KIZ) program was developed in 2004 as part of the Rendell administration’s stimulus package. This should address the lack of entrepreneurial activity and knowledge-based economic growth. Since its inception, the KIZ program has helped create more than 11,600 jobs.

These KIZs were founded around universities and focus on using them as economic engines. Each KIZ comprises various partnerships from the respective region, which include business developers, local governments, financial institutions and venture capitalists, among others.

Keystone Opportunity Zones (KOZ) are such a groundbreaking idea that Business Facilities magazine has named them the nation’s number one economic development strategy. They reflect a real sense of partnership between state and local tax authorities, school districts, economic development agencies and community organizations. With the elimination of certain state and local taxes in less developed and underused areas, these Pennsylvania communities are experiencing economic growth.

By the end of 2017, the KOZ applicants had created over 7,000 jobs and invested more than $2.5 billion in private capital in the KOZ properties. Due to the tremendous success of the KOZ initiative, there have been several opportunities for local communities to designate additional sub-zones.

COOPERATION BETWEEN BUSINESS AND EDUCATION

Pennsylvania’s workforce is distinguished by a unique combination of education, experience and curiosity, and is driven by the legendary “can-do” spirit. As a result, innovative solutions are discovered and developed every day.

Partnerships between universities and companies ensure that talented people receive targeted training and prepare them optimally for the demands of modern business. In Pennsylvania there are many renowned educational institutions that support companies in working in the most modern way.

PENNSYLVANIA INCOME TAX

Pennsylvania charges an income tax of 3.07%. In addition, federal income taxes are payable.

PENNSYLVANIA CORPORATE INCOME TAX

Pennsylvania collects a 9.99% corporate income tax. In addition, federal corporation tax is payable.

PENNSYLVANIA SALES TAX

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales tax rate in Pennsylvania

The sales tax in Pennsylvania is 6% at the state level. Municipalities or districts charge an average of 0.34% sales tax. Combined, an average of 6.34% is due.

Pennsylvania Nexus Laws & Sales Tax

Learn more about the Economic Nexus Laws in the context of Sales Tax here.

Effective Date

July 1, 2019

Transactions included:

Gross sales of products and services in the Commonwealth, including sales through agents, representatives or subsidiaries

Treatment of tax-exempt transactions:

Exempt Sales and Exempt Services are included in the threshold

Reason:

Sale only

Sales/Transactions Threshold:

$100,000

Evaluation period:

The threshold applies to sales in the previous 12 calendar months

Extra information:

  • The threshold did not include exempt sales or services until June 30, 2019 under another VAT liability for remote sellers.
  • Registration Requirements: Effective April 1, 2020, if Pennsylvania’s total sales for 2019 exceed the threshold, a remote seller must report and remit PA sales tax as taxable. The first quarter of each year is reserved for companies to tabulate their total Pennsylvania sales from the previous calendar year to determine their sales tax exposure. For more information, see Economic NexusAnswers.
  • Sales and Use Tax Bulletin

Pennsylvania Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

April 1, 2018; updated effective July 1, 2019

Economic Nexus Threshold:

More than $100,000 in gross sales in Pennsylvania in the last 12 months. Remote sellers should include sales made through a non-collecting marketplace when calculating the threshold. Marketplace intermediaries include all sales, leases and deliveries of tangible personal property and all sales of services made through the marketplace when calculating the threshold.

Note: By June 30, 2019, Remote Marketplace Agents with $10,000 or more in taxable sales in Pennsylvania must make an election to register and collect and remit their sales tax on all sales into Pennsylvania, or use the Notification and Comply with reporting requirements for non-collecting sellers. Effective July 1, 2019, the reporting option will no longer be available for sellers who cross the $100,000 economic nexus threshold.

Registration requirements:

  • Remote Multichannel Sellers: You must register with the Pennsylvania Department of Revenue (DOR) and collect Pennsylvania sales tax on sales that are not taxed by a Marketplace Agent once you have crossed the Economic Nexus Threshold.
  • Remote Marketplace Vendors: No need to register even if you cross the Economic Nexus Threshold. Contact the Pennsylvania DOR for more information.
  • In-State Multichannel Sellers: You must register with the Pennsylvania DOR and collect taxes on sales that are not taxed by a marketplace intermediary.
  • In-State Marketplace Sellers: No need to register. If you already have a license, report your gross sales plus the “0” for taxable – unless you start selling outside of the marketplace/market(s); Also, contact the Pennsylvania DOR for more information.