Pittsburgh is not only a great place to live, but also a wonderful city to do business. This is why we have seen so many new businesses start here or relocate to Pittsburgh. If you are considering opening a new business here or moving an existing one to Pittsburgh, then you may qualify for a number of special incentives that could make things easier for you. An experienced business law attorney can help you navigate the process so you don’t miss out on things that can make starting your new business in Pittsburgh easier than ever.
What Taxes are Applicable to New Businesses in Pittsburgh?
Like most states in America, Pennsylvania collects taxes on corporations doing business within the state. This includes Pittsburgh. However, this applies only to subchapter C corporations and limited liability companies (LLC) that have elected to be taxed as subchapter C corporations. The rate was 8.49% through December 31, 2024, but will be 7.99% for the 2025 tax year. This is because the legislature has decided to reduce the corporate income tax rate by 0.5 percentage points each year until it hits 4.99% in 2031. If your business entity is a subchapter S corporation or another pass-through entity like an LLC, then this corporate income tax rate will not apply to you.
At the same time, the state has increased the amount of capital investment pass-through that business owners can deduct on their individual income tax returns. This will allow you to reduce your personal income tax burden here in Pittsburgh by a greater amount than in the past. As it is, if you not only are starting your new business in Pittsburgh but also reside within the city limits, your net income will be taxed at a rate of 3% per year, with 2% going to school taxes. If you live outside of the city, then your net income will be taxed at 1% per year.
If your business involves owning real property, then you will also be subject to a property tax as well. The current rate in Allegheny County is $4.73 per $1,000 of assessed value. With the high value on many commercial properties, this could present your business with an added expense. For those businesses that lease their commercial space, most landlords here in Pittsburgh rent out on a triple net basis, with commercial tenants responsible for a portion of the property taxes, insurance and maintenance costs applicable to their proportionate rental of the entire commercial space. So, even if you do not own the space, you may still be subjected to real estate taxes.
All businesses in Pittsburgh that have employees are subject to a payroll tax of 0.55% of the total payroll. There is also a local service tax equal to 1% of the gross receipts of businesses located in Pittsburgh. This tax is due on or before March 15 each year. Finally, there are certain industry specific taxes, like an amusement tax on entertainment and recreational businesses, and a parking tax on garages and parking lots.
What Incentives are Available to New Businesses in Pittsburgh?
In addition to lowering corporate income tax rates, the state and city have taken steps to make Pittsburgh a more enticing location for new and relocating businesses. One way it has done so is through tax abatements. This will lower your income taxes if you are located within the Keystone Opportunity Zone. To qualify, you must make sure your business is located within the opportunity zone, you are compliant with all applicable state and local tax laws and building codes, and have filed your application before December 31 of the year you started your business.
You can also apply for a tax abatement under the Local Economic Revitalization Tax Assistance program in Allegheny county. This provides tax exemptions for the development of commercial residential structures in certain areas in Pittsburgh. The annual tax abatement can be as high as $250,000 for a 10-year period. If your focus is on industrial and commercial property and your business is working within the Keystone Special Development Zone in Pittsburgh, you may also be eligible for tax credit if you are redeveloping abandoned or deteriorated commercial and industrial sites. Applications are due by February 1 of the year following the start of your project.
Another excellent incentive is the Keystone Innovation Zone Tax Credit Program. If you locate your industry within the zone, you can be eligible for a tax credit as long as you have been operating there for less than eight years. The program is run by the PA Department of Community & Economic Development (DCED), and you must file an application each year before December 1 on DCED’s website.
For those who are involved in businesses that invest in rehabilitating, expanding, or improving buildings or land located within certain areas in Pittsburgh, you may be eligible for the Neighborhood Assistance Program, Enterprise Zone Tax Credit. These can also help reduce your business’ tax bill. To be eligible, you need to create or help retain jobs for local employees. The applications become available from DECD in the spring with the program closing shortly afterwards, so it is crucial to file early. These incentives give you 25% of the amount invested, and can provide you with up to $500,000 in tax credits per project.
The PA EDGE Tax Credit is another program designed to attract business to the state with the goal of stimulating economic growth and job creation. This focuses on certain businesses and industries, such as biomedical, milk processing and the production of semiconductors. Applications are due by March 1 of each year, and must be filed with the PA Department of Revenue.
If your business is focused on manufacturing, you could be eligible for the Manufacturing Tax Credit Program. This is for businesses that will be making a significant investment as it only applies to businesses that increase taxable payroll by at least one million dollars per year and retain these jobs for at least five years. This is similar to the Job Creation Tax Credit Program that seeks to create jobs within Pittsburgh. In order to be eligible, you must commit to either create at least 25 new full-time jobs or increase the number of full-time employees by 20% within three years of the start date of your business. Businesses that comply can receive a tax credit equal to $1,000 for each new job created.
Contact a Pittsburgh Business Law Attorney Today
Pittsburgh is doing more to attract new business by providing tax incentives that will make doing business here less costly than in the past. The key is to determine the eligibility of your business. The experienced business law attorneys at Jones Gregg Creehan & Gerace can help guide you through the process so you can take advantage of these opportunities. Contact us today to set up a consultation for your new business enterprise.