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
Amending the act of December 31, 1965 (P.L.1257, No.511),
entitled "An act empowering cities of the second class,
cities of the second class A, cities of the third class,
boroughs, towns, townships of the first class, townships of
the second class, school districts of the second class,
school districts of the third class and school districts of
the fourth class including independent school districts, to
levy, assess, collect or to provide for the levying,
assessment and collection of certain taxes subject to maximum
limitations for general revenue purposes; authorizing the
establishment of bureaus and the appointment and compensation
of officers, agencies and employes to assess and collect such
taxes; providing for joint collection of certain taxes,
prescribing certain definitions and other provisions for
taxes levied and assessed upon earned income, providing for
annual audits and for collection of delinquent taxes, and
permitting and requiring penalties to be imposed and
enforced, including penalties for disclosure of confidential
information, providing an appeal from the ordinance or
resolution levying such taxes to the court of quarter
sessions and to the Supreme Court and Superior Court," in
consolidated collection of local income taxes, further
providing for definitions.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "earned income" in section 501
of the act of December 31, 1965 (P.L.1257, No.511), known as The
Local Tax Enabling Act, is amended to read:
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Section 501. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Earned income." The compensation as required to be reported
to or as determined by the Department of Revenue under section
303 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, and rules and regulations promulgated under
that section subject to the following:
(1) Employee business expenses as reported to or
determined by the Department of Revenue under Article III of
the Tax Reform Code of 1971 shall constitute allowable
deductions in determining earned income.
(2) The term does not include:
(i) Wages or compensation paid to individuals on
active military service, regardless of whether it is
earned for active military service inside or outside this
Commonwealth[.], and to the spouses of such individuals,
provided that the spouses reside with the individuals
outside this Commonwealth.
(ii) Offsets for business losses.
(iii) The amount of any housing allowance provided
to a member of the clergy.
(3) For purposes of collection of earned income and net
profits taxes under this chapter and for crediting purposes
under section 317, the term shall include all taxes on earned
income or net profits whether authorized by this act or any
other law of this Commonwealth unless the law expressly
provides otherwise.
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* * *
Section 2. This act shall take effect in 60 days.
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