What is Pennsylvania’s franchise tax?

Pennsylvania no longer has a franchise tax. The state’s Capital Stock and Foreign Franchise Tax, which functioned as a franchise tax on both domestic and foreign corporations, was fully repealed for tax years beginning after December 31, 2015. 

These taxes applied to corporations, LLCs taxed as corporations, business trusts, and similar entities. Businesses now only need to consider corporate net income tax (CNIT) and other applicable state taxes. You must file a CNIT return if your entity is treated as a C corporation for federal purposes, whether the charter was issued in Pennsylvania or elsewhere. 

Additional state taxes

Even after budgeting for the Corporate Net Income Tax, Pennsylvania expects you to manage several other state-level taxes that can quietly undo your cash-flow projections if ignored.

Sales and registration obligations:

• Sales and use tax registration - Use PA-100 Business Tax Registration form (same application from entity formation)
• Pre-invoice setup - Establish a remittance account before the first invoice goes out
• Missed registration recovery - Form available from the state's small-business guide if initially overlooked

Employee-related tax requirements:

• Employer withholding - Added to PA-100 profile with separate deposit calendar from CNIT due dates
• Unemployment insurance - Independent schedule that rarely matches other tax deadlines
• Federal coordination risk - State deposit mismatches can trigger federal penalty notices due to payroll data connections

Local government tax layers:

• Philadelphia-specific - Business Income and Receipts Tax plus Net Profits Tax, each with separate penalty calculations
• Borough and township taxes - Mercantile or gross-receipts taxes outside Philadelphia
• Independent tracking - Local liabilities don't flow automatically to Harrisburg, requiring separate management from CNIT and sales tax

FAQs about Pennsylvania franchise tax

Does Pennsylvania still have a franchise tax?

No. The Capital Stock and Foreign Franchise Taxes were phased out for tax years beginning after January 1, 2016. The only "franchise" levy that survives is the industry-specific Oil Company Franchise Tax that applies to fuel distributors, not to ordinary corporations.

What replaced the Pennsylvania franchise tax?

The Corporate Net Income Tax (CNIT) is now the state's primary business-level tax.

How does Pennsylvania tax multi-state businesses?

If you sell into several states, only the revenue sourced to Pennsylvania gets taxed. The CNIT uses a single-sales-factor apportionment formula, so your payroll and property outside the Commonwealth are ignored.

How do I determine if my business has nexus in Pennsylvania?

Nexus exists when your company's activity—sales, employees, or property—creates a sufficient connection to the state. 

Discern automates your Pennsylvania compliance obligations

Discern tracks Pennsylvania's annual report deadlines alongside your entire multi-state portfolio, ensuring you maintain good standing while we handle the compliance complexity. Our platform manages registered agent services in all 51 jurisdictions and automates routine state filings, preventing monthly penalties and daily interest that come from missed deadlines. 

Ready to simplify your Pennsylvania compliance? Book a demo with Discern today.