HB 1582 — An Act amending the act of December 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling Act, in local taxes, further providing for delegation of taxing powers and restrictions thereon, for payroll tax and for limitations on rates of specific taxes and providing for expiration of business gross receipts tax.

PRINTER'S NO.   1886

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1582
                                               Session of
                                                 2025

     INTRODUCED BY KERWIN, GAYDOS, ROWE AND STENDER, JUNE 9, 2025

     REFERRED TO COMMITTEE ON FINANCE, JUNE 10, 2025


                                    AN ACT
 1   Amending the act of December 31, 1965 (P.L.1257, No.511),
 2      entitled "An act empowering cities of the second class,
 3      cities of the second class A, cities of the third class,
 4      boroughs, towns, townships of the first class, townships of
 5      the second class, school districts of the second class,
 6      school districts of the third class and school districts of
 7      the fourth class including independent school districts, to
 8      levy, assess, collect or to provide for the levying,
 9      assessment and collection of certain taxes subject to maximum
10      limitations for general revenue purposes; authorizing the
11      establishment of bureaus and the appointment and compensation
12      of officers, agencies and employes to assess and collect such
13      taxes; providing for joint collection of certain taxes,
14      prescribing certain definitions and other provisions for
15      taxes levied and assessed upon earned income, providing for
16      annual audits and for collection of delinquent taxes, and
17      permitting and requiring penalties to be imposed and
18      enforced, including penalties for disclosure of confidential
19      information, providing an appeal from the ordinance or
20      resolution levying such taxes to the court of quarter
21      sessions and to the Supreme Court and Superior Court," in
22      local taxes, further providing for delegation of taxing
23      powers and restrictions thereon, for payroll tax and for
24      limitations on rates of specific taxes and providing for
25      expiration of business gross receipts tax.
26      The General Assembly of the Commonwealth of Pennsylvania
27   hereby enacts as follows:
28      Section 1.    Sections 301.1(a.1) and (f)(12), 303(d) and
29   311(2) of the act of December 31, 1965 (P.L.1257, No.511), known
30   as The Local Tax Enabling Act, are amended to read:
 1      Section 301.1.     Delegation of Taxing Powers and Restrictions
 2   Thereon.--* * *
 3      [(a.1)     (1)   A local taxing authority may levy a tax on the
 4   privilege of doing business in the jurisdiction of the local
 5   taxing authority if:
 6      (i)     the privilege is exercised by conducting transactions in
 7   the jurisdiction of the levying local taxing authority for all
 8   or part of fifteen or more calendar days within the calendar
 9   year; or
10      (ii)     the privilege is exercised through a base of operations
11   in the jurisdiction of the levying local taxing authority. The
12   gross receipts subject to this tax shall not include any
13   receipts subject to a tax measured by such gross receipts which
14   is imposed under subparagraph (i).
15      (2)     As used in this subsection, the term "base of
16   operations" shall mean an actual, physical and permanent place
17   of business from which a taxpayer manages, directs and controls
18   its business activities at that location.]
19      * * *
20      (f)     Such local authorities shall not have authority by
21   virtue of this act:
22      * * *
23      (12)     To levy, assess and collect a mercantile or business
24   privilege tax on gross receipts. [or part thereof which are: (i)
25   discounts allowed to purchasers as cash discounts for prompt
26   payment of their bills; (ii) charges advanced by a seller for
27   freight, delivery or other transportation for the purchaser in
28   accordance with the terms of a contract of sale; (iii) received
29   upon the sale of an article of personal property which was
30   acquired by the seller as a trade-in to the extent that the

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 1   gross receipts in the sale of the article taken in trade does
 2   not exceed the amount of trade-in allowance made in acquiring
 3   such article; (iv) refunds, credits or allowances given to a
 4   purchaser on account of defects in goods sold or merchandise
 5   returned; (v) Pennsylvania sales tax; (vi) based on the value of
 6   exchanges or transfers between one seller and another seller who
 7   transfers property with the understanding that property of an
 8   identical description will be returned at a subsequent date;
 9   however, when sellers engaged in similar lines of business
10   exchange property and one of them makes payment to the other in
11   addition to the property exchanged, the additional payment
12   received may be included in the gross receipts of the seller
13   receiving such additional cash payments; (vii) of sellers from
14   sales to other sellers in the same line where the seller
15   transfers the title or possession at the same price for which
16   the seller acquired the merchandise; or (viii) transfers between
17   one department, branch or division of a corporation or other
18   business entity of goods, wares and merchandise to another
19   department, branch or division of the same corporation or
20   business entity and which are recorded on the books to reflect
21   such interdepartmental transactions.]
22      * * *
23      Section 303.   Payroll Tax.--* * *
24      (d)   A city of the second class may enact ordinances and
25   regulations necessary to implement this section. [The ordinance
26   levying the tax authorized by this section shall permanently
27   replace the city's existing mercantile tax and shall reduce the
28   business privilege tax rate as follows:
29      (1)   In tax years 2005 and 2006, the business privilege tax
30   shall be two mills.

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 1      (2)    In tax years 2007, 2008 and 2009, the business privilege
 2   tax shall be one mill unless the revenues collected from the
 3   payroll expense tax exceed fifty million five hundred thousand
 4   dollars ($50,500,000) in any fiscal year, at which time the
 5   business privilege tax shall be replaced for the subsequent
 6   fiscal year. After the phaseout of the business privilege tax,
 7   all amounts of moneys in excess of fifty million five hundred
 8   thousand dollars ($50,500,000) shall be used by the city of the
 9   second class to further accelerate the reduction of the tax
10   imposed by the city of the second class on parking as provided
11   in section 308.
12      (3)    In tax year 2010 and thereafter, the business privilege
13   tax may not be imposed.]
14      * * *
15      Section 311.    Limitations on Rates of Specific Taxes.--No
16   taxes levied under the provisions of this chapter shall be
17   levied by any political subdivision on the following subjects
18   exceeding the rates specified in this section:
19      * * *
20      [(2)    On each dollar of the whole volume of business
21   transacted by wholesale dealers in goods, wares and merchandise,
22   one mill, by retail dealers in goods, wares and merchandise and
23   by proprietors of restaurants or other places where food, drink
24   and refreshments are served, one and one-half mills; except in
25   cities of the second class, where rates shall not exceed one
26   mill on wholesale dealers and two mills on retail dealers and
27   proprietors. No such tax shall be levied on the dollar volume of
28   business transacted by wholesale and retail dealers derived from
29   the resale of goods, wares and merchandise, taken by any dealer
30   as a trade-in or as part payment for other goods, wares and

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 1   merchandise, except to the extent that the resale price exceeds
 2   the trade-in allowance. When a political subdivision which
 3   currently levies, assesses or collects a mercantile or business
 4   privilege tax on gross receipts under section 533 of the act of
 5   December 13, 1988 (P.L.1121, No.145), known as the "Local Tax
 6   Reform Act," merges with one or more political subdivisions to
 7   form a new political subdivision on or after August 1, 2008, the
 8   new political subdivision may levy that mercantile or business
 9   privilege tax in the first year following the merger at a rate
10   necessary to generate the same revenues generated in the last
11   fiscal year that the merging political subdivision generated
12   before the merger. Such rate shall remain in effect for the new
13   political subdivision in subsequent years, but the revenue-
14   neutral limitation shall only apply to the first year following
15   the merger. If the merging political subdivision had previously
16   shared the rate of taxation with another political subdivision,
17   the nonmerging political subdivision which had shared the rate
18   is capped at the rate it was previously levying.]
19      * * *
20      Section 2.     The act is amended by adding a section to read:
21      Section 331.     Expiration of Business Gross Receipts Tax.--(a)
22   All mercantile, business privilege and other business gross
23   receipts taxes authorized under this chapter and in accordance
24   with section 311 shall expire December 31, 2025.
25      (b)   A political subdivision may not levy, assess or collect
26   a tax referred to under subsection (a) after December 31, 2025.
27      Section 3.     This act shall take effect as follows:
28            (1)   The following shall take effect immediately:
29                  The addition of section 331 of the act.
30                  This section.

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1         (2)     The remainder of this act shall take effect December
2     31, 2026.




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