House Bill 1342 was approved and part of the final budget process for the upcoming fiscal year. Included in this tax code bill is language that will codify the tax deferral benefit of like-kind exchanges beginning in the 2023 tax year.
Prior to enactment of this legislation, Pennsylvania was the only state in the nation that did not provide for a state tax benefit to like-kind exchanges. IRC Section 1031 provides that no gain or loss shall be recognized on the exchange of like-kind property held for productive use in a trade or business or for investment.
Like-kind exchanges are an important tool for encouraging investment, building wealth and creating jobs. Passage of this legislation will help ensure Pennsylvania is competitive with all other states.
