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Michigan and Pennsylvania make tax reform changes

Written on Aug 12, 2022

Two of Ohio’s neighboring states, Michigan and Pennsylvania, have recently enacted noteworthy tax legislation. Derek K. Heyman, PhD, JD, CPA, of Zaino Hall & Farrin LLC, Attorneys at Law, wrote a summary of the recent changes.  

In July Michigan Governor Gretchen Whitmer signed into law Senate Bill 248, which creates a means of reporting federal changes to a partnership’s income resulting from a partnership-level audit or administrative adjustment request. 

The enacted bill creates a new Chapter 18 in the Michigan Income Tax Act requiring partnerships and partners to report final federal adjustments within 90 days after the final determination date. A partnership may also make an irrevocable election to report such adjustments at the partnership level. Chapter 18 specifies that the election is made by a state partnership representative who has the authority to act on behalf of the partnership and its direct and indirect partners. 

In Pennsylvania Governor Tom Wolf signed into law H.B. 1342, an omnibus tax bill that reduces the corporate tax rate and makes numerous other tax reforms. Pennsylvania’s current 9.99% rate for the corporate net income tax will be reduced to 8.99% for tax year 2023, after which it will phase down by one half of a percentage point each year until it reaches 4.99% for the 2031 tax year, where it will remain, barring subsequent legislation. The new law also codifies the economic nexus standards that were issued as a Revenue tax policy in Corporation Tax Bulletin No. 2019-04. 

To read all the changes, go to the article here.