The state House voted Tuesday to tax tech companies that run digital advertisements in the commonwealth, and use the revenue to fund a property tax rebate for seniors.

The Department of Revenue estimates the measure could bring in roughly $329 million in the 2026-2027 fiscal year.

While a number of Republicans spoke against the bill, it ultimately garnered bipartisan support with a 139-63 vote. Thirty-nine Republicans joined all but two Democrats in supporting it.

The measure would expand the state’s existing a 5% gross receipts tax to include revenue made from digital advertising services operating in Pennsylvania. Many of the largest tech companies in the country, like Meta and Google, make the bulk of their revenue selling targeted ads.

It would include an exemption for broadcast and news media companies.

“We all hear it in our district offices: ‘the cost of everything is too high,'” said the bill’s sponsor, Rep. Elizabeth Fiedler (D-Philadelphia) “Through it all, small businesses and those same working people manage to pay their taxes. Yet some of the wealthiest corporations in the entire world have gotten a free pass in our state for too long. That is what this bill is about.”

The proposal was initially introduced as part of a package of bills pushed by a coalition of progressive organizations called Pennsylvanians for Accountability from Yass, Billionaires and Corporations (PAYBAC).

The other two would close what’s known as the Delaware loophole, where businesses establish holding companies in Delaware to avoid paying Pennsylvania corporate taxes, and raise non-wage income from sources like trusts and dividends on stock sales.

Ultimately, the goal is to shift more of the tax burden to the wealthiest individuals living in and doing business in the commonwealth, with the digital ad tax bill targeting big tech companies in particular.

It was the notion of increasing taxes, however, that drew criticism from House Minority Leader Rep. Jesse Topper (R-Bedford). He said that, while he favored property tax rebates for seniors, he believes that raising taxes on businesses to fund it will ultimately chase companies out of the commonwealth and shrink the tax base.

“If we want to give property tax relief to seniors, we can do that without adding more taxes,” he said. “We don’t need to go revenue hunting for more taxes. We need economic growth in Pennsylvania.”

Other critics have warned that the levy on large tech companies could be passed through to small businesses who advertise with them in Pennsylvania.

Debate over the bill comes as lawmakers face a June 30 deadline to deliver a state budget for the 2026-2027 fiscal year to Gov. Josh Shapiro.

The state currently has a structural deficit, which the Independent Fiscal Office estimates could grow to $6.7 billion next year if lawmakers enact the budget proposed by Shapiro without creating new sources of revenue.

While the digital ad tax measure was initially pitched as a way to offset that deficit with new revenue from large companies, it was later amended to support a property tax rebate for homeowners over the age of 65, or homeowners living with someone over 65.

According to Rep. Steve Samuelson (D-Northampton), money collected through the tax would go into a dedicated property tax relief fund. Qualifying homeowners could then apply for the rebate.

Asked whether the measure would still serve the purpose of closing the deficit. Samuelson told the Capital-Star, “It helps the people of Pennsylvania. Every homeowner over the age of 65 and every homeowner who has somebody in their household over the age 65 will get property tax relief.”

Asked whether she thought tying the digital ad tax to a property tax rebate for seniors was necessary to sway Republicans to vote for it, Fiedler demurred.

“I think property tax relief for seniors is the sort of thing that you saw their support for across party lines, I would hope in both chambers.” Fiedler said. “That said, if the Senate wants to come back and talk about other ways they would like to use this money, I think we’re open to a conversation.”

“We are going to be facing really, really hard budget decisions,” she added. “So I think this is a smart decision — a creative idea — to bring in revenue and get out ahead of it so that we’re ready, and we don’t have to make some of these horrible choices about cutting programs people are counting on.”

The digital ad tax bill will have to be passed in the GOP-controlled Senate in order to reach Shapiro’s desk for his signature.

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