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Pennsylvania Governor Tom Wolf released his proposed 2015-2016 state General Fund budget on March 3, 2015. It sets forth a spending plan of $29.9 billion, increasing state expenditures by $836.5 million or 2.8 percent (after adjusting for proposed supplemental appropriations and lapses) over the prior fiscal year (FY).

The proposal contains numerous revenue modifications totaling $4.55 billion in 2015-2016, including an increase in the Sales and Use Tax and broadening of the tax to additional services ($1.55 billion in new revenue).

Preliminary Analysis

Governor Wolf’s FY 2015-2016 budget proposal would increase the Sales and Use Tax by 0.6 percent, from 6.0 percent to 6.6 percent or 7.6 percent in Allegheny County. The tax expansion would include a variety of new items and services that are currently tax exempt beginning January 1, 2016.

Currently, numerous items (tangible personal property or circumstantial transactions) are specifically excluded from the sales tax. The exclusions for items that are commonly considered to be necessities, such as food and clothing, will remain in place. The following is a brief description of sales tax exemptions and services subject to the proposed change.

Governor Wolf’s proposal maintains the following sales tax exemptions:

  • Food
  • Clothing and Footwear
  • Prescription Drugs and Orthopedic Equipment
  • Gasoline and Motor Fuels
  • Physician and dental services
  • Manufacturing and Processing Equipment
  • Hospitals
  • Tuition (college, vocational training and instruction)
  • Exempt Governmental Units
  • Residential Utilities: Telephone, Electricity, Fuel Oil and Natural Gas
  • Water and Sewage Services
  • Trade-In Value
  • Purely Public Charities
  • Liquor or Malt Beverages Purchased from Bars and Restaurants
  • Common Carriers

The following items and services will now be subject to sales tax:

General/Personal Items

  • Candy and Gum
  • Personal Hygiene Products
  • Newspapers
  • Magazines
  • Non-Prescription Drugs
  • Caskets and Burial Vaults
  • Flags
  • Textbooks
  • Catalogs and Direct Mail Advertising

Other Items

  • Airline Catering
  • Commission
  • Horses
  • Construction of Memorials
  • Uniform Commercial Code Filing Fees
  • Investment Metal Bullion and Investment Coins
  • Cable Television

Services (Business-to-business purchases of these services will remain exempt from sales tax)

  • Transportation
  • Motion Picture and Video Industries
  • Other Financial Investment Activities
  • Real Estate Agent and Broker Services
  • Legal Services
  • Accounting Services
  • Specialized Design Services
  • Scientific Research and Development Services
  • Advertising Services
  • Other Professional Services
  • Employment Services
  • Business Support Services
  • Travel Arrangement Services
  • Other Support Services
  • Waste Collection
  • Higher Education
  • Home Health Care Services
  • Other Ambulatory Health Care Services 
  • Nursing and Residential Care Facilities
  • Social Assistance
  • Performing Arts
  • Spectator Sports
  • Museums, Historical Sites, and Similar Institutions
  • Amusement and Recreation Industries
  • Recreational Vehicle Parks and Recreational Camps
  • Personal Care Services
  • Death Care Services
  • Dry-cleaning and Laundry Services
  • Other Personal Services

For further details on the aforementioned services to be impacted, please click here.