Pennsylvania Tax Law Changes 2017/2018

February 6, 2018 News

Pennsylvania Withholding Requirements

Effective January 1, 2018, certain payments over $5,000 made by businesses for rental of PA property and non-employee compensation to PA nonresidents will now be subject to personal income tax withholdings. Form PA-100 may need to be filed to register for withholding accounts. Quarterly reports will need to be filed as well an annual Form 1099.


Achieving a Better Life Experience (ABLE) Accounts

ABLE accounts are tax advantaged savings accounts for individuals with disabilities and their families. Contributions to these accounts made after 10/30/17 will be allowed as a deduction from Pennsylvania taxable income (up to and including $14,000 per year).  Distributions and undistributed earnings from these accounts are exempt from personal income tax.


Cash Prize Payments from the Pennsylvania Lottery

Started in 2016, they are taxable for PA personal income tax purposes. Withholding is required to be withheld.


Sales Tax

Digital products, such as video, books, games, apps, music, software, etc. transferred to a customer by download, streaming or other electronic means is subject to sales and use tax for purchases. If the vendor does not charge you sales tax for the purchases of the digital product, the buyer is responsible for use tax (this rule applies to all items subject to sales tax).


Federal Bonus and Section 179 Deprecation Rules

The Federal Tax Cuts and Jobs Act will allow a deduction of 100% of the cost for certain property placed in service after September 27, 2017. Pennsylvania will not follow this law.  Taxpayers will need to add back the 100% federal bonus amount.

As previously enacted 179 Depreciation is still limited to $25,000.