PA SB1208

Reduces Pennsylvania's corporate net income tax rate to 4% for taxable years beginning January 1, 2026, and thereafter, accelerating the previously scheduled gradual reduction that would have reached 4.99% by 2031.

Requires corporations that are members of a "unitary business" to file combined annual reports beginning for taxable years after December 31, 2026, with one designated member acting as agent for all members.

Establishes mandatory "water's-edge" combined reporting, which includes income and apportionment factors from U.S.-incorporated entities, entities with at least 20% of sales in the U.S., and certain controlled foreign corporations with Subpart F income.

Defines 48 specific jurisdictions as "tax havens" (including Bermuda, Cayman Islands, Ireland, Luxembourg, Netherlands, and Switzerland), requiring inclusion of income from entities incorporated or doing business in those locations unless they demonstrate paying effective tax rates above 90% of the U.S. federal corporate rate.

Eliminates dividend deductions between members of a unitary group and restricts net operating loss carryforwards to the individual member that generated the loss, preventing losses from being shared across unitary group members.