HB 206 — An Act amending the act of December 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling Act, in consolidated collection of local income taxes, further providing for definitions.

PRINTER'S NO.   154

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 206
                                               Session of
                                                 2025

     INTRODUCED BY MERSKI, SANCHEZ, HILL-EVANS, HARKINS, FREEMAN,
        KENYATTA AND GIRAL, JANUARY 17, 2025

     REFERRED TO COMMITTEE ON FINANCE, JANUARY 17, 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      consolidated collection of local income taxes, further
23      providing for definitions.
24      The General Assembly of the Commonwealth of Pennsylvania
25   hereby enacts as follows:
26      Section 1.    The definition of "earned income" in section 501
27   of the act of December 31, 1965 (P.L.1257, No.511), known as The
28   Local Tax Enabling Act, is amended to read:
 1   Section 501.    Definitions.
 2      The following words and phrases when used in this chapter
 3   shall have the meanings given to them in this section unless the
 4   context clearly indicates otherwise:
 5      * * *
 6      "Earned income."     The compensation as required to be reported
 7   to or as determined by the Department of Revenue under section
 8   303 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
 9   Reform Code of 1971, and rules and regulations promulgated under
10   that section subject to the following:
11          (1)     Employee business expenses as reported to or
12      determined by the Department of Revenue under Article III of
13      the Tax Reform Code of 1971 shall constitute allowable
14      deductions in determining earned income.
15          (2)     The term does not include:
16                (i)    Wages or compensation paid to individuals on
17          active military service, regardless of whether it is
18          earned for active military service inside or outside this
19          Commonwealth[.], and to the spouses of such individuals,
20          provided that the spouses reside with the individuals
21          outside this Commonwealth.
22                (ii)    Offsets for business losses.
23                (iii)    The amount of any housing allowance provided
24          to a member of the clergy.
25          (3)     For purposes of collection of earned income and net
26      profits taxes under this chapter and for crediting purposes
27      under section 317, the term shall include all taxes on earned
28      income or net profits whether authorized by this act or any
29      other law of this Commonwealth unless the law expressly
30      provides otherwise.

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1     * * *
2     Section 2.    This act shall take effect in 60 days.




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