The phase-out of Pennsylvania’s Capital Stock Tax & Franchise Tax was final as of January 1, 2016.
This phase-out had been proposed for many years, however, the elimination of the tax had been delayed several times. Historically, this tax has been imposed on companies doing business in Pennsylvania based on the company’s capital stock value, without regard to whether or not the company was subject to a corporate income tax in Pennsylvania. The elimination of the tax means that many business types, such as S corporations, LLCs taxed as pass-through entities, and business trusts will no longer need to pay this tax and file Pennsylvania Corporate Tax Report for tax years beginning on or after January 1, 2016. These businesses should file a final Pennsylvania Form RCT101 for tax year 2015, making sure to mark it as a final return.