An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, providing for exemption from tax for early withdrawal from certain accounts.

PRINTER'S NO. 1637
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1300
Session of
2026
INTRODUCED BY PISCIOTTANO, HAYWOOD, SANTARSIERO, HUGHES,
PENNYCUICK, FONTANA, COSTA, CAPPELLETTI, VOGEL AND PICOZZI,
APRIL 23, 2026
REFERRED TO FINANCE, APRIL 23, 2026
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in personal income tax, providing for exemption
from tax for early withdrawal from certain accounts.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding a section to
read:
Section 304.3. Exception from tax for early withdrawals from
certain accounts.--(a) The General Assembly finds and declares
that the Commonwealth shall exclude certain retirement account
withdrawals from personal income tax to mirror the Federal
Government's removal of taxation on the certain withdrawals.
(b) In accordance with the current tax exemption by the
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Federal Government, the following shall be exempt from taxation
as personal income in this Commonwealth, to the limits under
subsection (c):
(1) Expenses related to the birth or adoption of a child.
(2) The purchase of a house by a first time homebuyer.
(c) The following amounts shall be excluded from tax:
(1) Each parent may withdraw up to five thousand dollars
($5,000) individually for each child born or adopted.
(2) The parents may withdraw up to ten thousand dollars
($10,000) together for each child born or adopted.
(3) Each first time home buyer may withdraw up to ten
thousand dollars ($10,000).
Section 2. This act shall apply to tax years beginning on or
after January 1, 2027.
Section 3. This act shall take effect in 60 days.
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