HARRISBURG, PA — A proposal to extend Pennsylvania’s gross receipts tax to digital advertising revenue advanced out of the House Finance Committee on Wednesday, setting up a broader debate over whether major technology companies should face new state taxes as lawmakers search for additional revenue sources.
House Bill 1678 would apply Pennsylvania’s existing 5% gross receipts tax to certain digital advertising revenues generated by large online advertising platforms. The measure now moves to the full House for consideration.
Supporters say the legislation would modernize the state’s tax code to reflect the growing role of digital advertising in the economy and could generate hundreds of millions of dollars in annual revenue.
According to estimates cited by the bill’s backers, the proposal could generate as much as $624 million in 2027.
The legislation is sponsored by Reps. Elizabeth Fiedler, Aerion Abney and John Inglis. A companion measure, Senate Bill 1199, is sponsored by Sens. Lindsey Williams, Nikil Saval and Katie Muth.
Under the proposal, taxable digital advertisements would include banner ads, search-engine advertising and certain full-screen online advertisements sold through digital platforms.
Supporters contend the tax would primarily affect large technology companies that dominate the digital advertising market, including Google, Meta, Amazon, TikTok and Microsoft, rather than small businesses purchasing advertising or consumers making online purchases.
“Big Tech is making billions of dollars on ads targeting Pennsylvanians and harvesting our data, but they aren’t paying any state taxes on that revenue,” Williams said in a statement.
Backers of the measure argue that additional revenue could be directed toward public services, infrastructure and education, while also reducing reliance on existing tax sources.
“Our Commonwealth ranks among the most unequal states in the nation,” Saval said. “By updating our tax code to include the vast empire of digital advertising, Pennsylvania can generate hundreds of millions of dollars in revenue.”
The proposal is part of a broader legislative package known as “Tax Billionaires, Fund PA,” which includes measures aimed at increasing tax collections from high-income individuals and large corporations.
The bill’s advancement comes as states across the country continue exploring ways to tax digital economic activity that was largely absent when many state tax codes were originally written. Similar proposals in other states have drawn legal and constitutional challenges from industry groups, which argue that digital advertising taxes can create compliance burdens and raise questions about interstate commerce.
House Bill 1678 now awaits consideration by the full Pennsylvania House of Representatives.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.