Allegheny Institute - Lincoln Radio Journal
Jul 10, 2026 · 9 min · 8 segments
A discussion of taxing digital advertising, with certain exemptions, as a way to provide property tax relief for senior citizens.
So the proposal is a bit interesting in that rather than creating a new tax on digital advertising, the legislature is looking to instead expand the existing gross receipts tax to cover digital advertising.
The gross receipts tax is one that we haven't covered a whole lot, and it's a bit of a unique tax in that it taxes the gross receipts or essentially the revenue of a particular company or corporation, etc., So something like the corporate net income tax, you have certain deductions based on cost of doing business, so to speak.
The gross receipts tax is just going to be on the overall revenue before any deductions.
In Pennsylvania, the gross receipts tax only covers certain sectors, and so the state's tax compendium lists that this would be private bankers, pipeline, conduit, steamboat, canal, slack water navigation, and transportation companies.
And then in 2004, it was expanded to cover telephone, telegraph and mobile communication companies.
And then there's also a few other ones related to electricity and then rail and freight companies.
The current tax rate on almost all of these industries is 5% on each dollar of gross receipts that companies in each of the aforementioned sectors receive from passengers, baggage, oil, and freight transporter within the state, telegraph or telephone messages transmitted wholly within the state, including for purposes of interstate commerce, and then mobile telecommunications sourced to the Commonwealth.
The only difference is that gross receipts from the sales of electric energy within the state and certain sales made outside of it are subject to a 5.9% tax rate instead.
The legislation would extend the 5% rate to the gross receipts of entities deriving income from digital advertising services displayed to a user on a digital interface wholly within this commonwealth, including banner advertising, search engine advertising, interstitial advertising, and comparable advertising services that utilize the personal information of the users to whom the advertisements are served.
The tax is primarily intended for large tech companies which rely on digital advertising revenue.
So the proposal is a bit interesting in that rather than creating a new tax on digital advertising, the legislature is looking to instead expand the existing gross receipts tax to cover digital advertising.
The gross receipts tax is one that we haven't covered a whole lot, and it's a bit of a unique tax in that it taxes the gross receipts or essentially the revenue of a particular company or corporation, etc., So something like the corporate net income tax, you have certain deductions based on cost of doing business, so to speak.
The gross receipts tax is just going to be on the overall revenue before any deductions.
In Pennsylvania, the gross receipts tax only covers certain sectors, and so the state's tax compendium lists that this would be private bankers, pipeline, conduit, steamboat, canal, slack water navigation, and transportation companies.
And then in 2004, it was expanded to cover telephone, telegraph and mobile communication companies.
And then there's also a few other ones related to electricity and then rail and freight companies.
The current tax rate on almost all of these industries is 5% on each dollar of gross receipts that companies in each of the aforementioned sectors receive from passengers, baggage, oil, and freight transporter within the state, telegraph or telephone messages transmitted wholly within the state, including for purposes of interstate commerce, and then mobile telecommunications sourced to the Commonwealth.
The only difference is that gross receipts from the sales of electric energy within the state and certain sales made outside of it are subject to a 5.9% tax rate instead.
The legislation would extend the 5% rate to the gross receipts of entities deriving income from digital advertising services displayed to a user on a digital interface wholly within this commonwealth, including banner advertising, search engine advertising, interstitial advertising, and comparable advertising services that utilize the personal information of the users to whom the advertisements are served.
The tax is primarily intended for large tech companies which rely on digital advertising revenue.
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