How the $650 Million Tax Increase Impacts You

The state budget is, for all intents and purposes, complete. While it remains unbalanced, we now know exactly which taxes are going up. 

The $650 million tax hike passed by the legislature is less destructive than Governor Wolf's $2.7 billion proposal—which would have taken another $850 per family of four—but it still demands more of working Pennsylvanians in the midst of a struggling economy.

The chart below breaks down the additional $204 per family of four in new taxes. It also shows which Wolf tax hikes were not approved. 

Tax Hikes in the 2016-2017 Budget
State Tax Rate Changes

Total Revenue


Per Capita Per Family of Four
Income tax on lottery winnings $15,800 $1.23 $4.94
Digital downloads sales tax $46,900 $3.66 $14.65
Bank shares tax $23,000 $1.80 $7.19
Cigarette tax hike $431,100 $33.67 $134.69
Smokeless tobacco and e-cigarettes tax $64,600 $5.05 $20.18
Limit on vendor sales tax discount $55,500 $4.34 $17.34
Gambling tax on table games $16,800 $1.31 $5.25
Severance Tax $217,800 $17.01 68.05
Personal Income Tax $1361,500 $106.35 425.39
Insurance Premium Tax $100,900 $7.88 31.53
Total State Tax Increases $653,700 $51.06 $204.24

Low-income Pennsylvanians will feel the brunt of the tax increases, since the bulk of the new revenue comes from cigarettes and tobacco products. Those making less than $30,000 spend 14.2 percent of their income on tobacco, while those earning between $30,000 and $59,999 spend only 4.3 percent. 

To add insult to injury, politically-favored corporations were awarded new forms of corporate welfare. The final budget increases the film tax credit for Hollywood film producers by $5 million, beginning next year, and adds at least $9 million in a variety of other corporate handouts.

To shield Pennsylvanians from higher taxes, elected officials must control spending. A great place to start is reducing corporate welfare by limiting borrowing and tax credits. Passing true pension reform will also go a long way in relieving the long-term budget squeeze on school funding.