Pennsylvania Deal to Break Budget Impasse Severs From US Tax Law

Pennsylvania enacted a $50.1 billion fiscal year 2026 budget deal Wednesday that severs from new federal tax provisions allowing businesses to deduct research and manufacturing facility expenses the first year they are incurred.

The state is skipping adoption of these measures from the Trump administration’s signature tax law over concerns it would cost the state about $700 million in tax revenue in fiscal year 2026.

The deal maintained an accelerated schedule of corporate income tax cuts that trims the rate to 7.49% in the next fiscal year.

The budget doesn’t tap the state’s $7.5 billion rainy day fund or raise ...