The Capital Stock Tax is a property tax applicable to all domestic corporations (i.e. those incorporated in Pennsylvania) and all domestic limited liability companies (i.e. those established in Pennsylvania).
This tax is computed by multiplying the Capital Stock Value of the entity times the Capital Stock Tax Rate.
The Capital Stock Value is determined according to the following statutory formula: the product of 1/2 the sum of (1) the five year average net income capitalized at the rate of 9.5% plus (2) 75% of net worth, from which product shall be subtracted $160,000.
The Capital Stock Rate is subject to the following gradual phase out: 2.89 mills (.00289) for tax years beginning during 2008 through 2011; 1.89 mills (.00189) for tax years beginning during 2012; and 0.89 mills (.00089) for tax years beginning during 2013. This tax was to be repealed for tax years beginning during 2014; however, Act 72 of 2013 has extended the Capital Stock Tax for two more years, at 0.67 mills (.00067) for 2014 and 0.45 mills (.00045) for 2015, with the tax repealed for year 2016 and thereafter.