HARRISBURG – On February 23, 2016, Pennsylvania Governor Tom Wolf today signed legislation to benefit military personnel by restoring the exemption from the state’s Earned Income Tax (EIT) when they are on active-duty military service, said state Rep. David Parker (R-Monroe).
The Earned Income Tax (EIT) in Pennsylvania is assessed by and payable to local municipalities. In Pike County, the EIT tax was passed by Westfall Township (at one mil effective May 15, 2015), Matamoras Borough (at one mil effective January 1, 2015), Lehman Township (at a half a mil, effective January 1, 1968) and Porter Township (at one mil with no effective date reported by state).
House Bill 561 restores the 1965 exemption for wages or compensation paid to individuals on active duty military service from the EIT, regardless of whether it is earned for service within the borders of the Commonwealth or not. The exemption was adopted in 1965 to honor and help military personnel called to active-duty military service.
The bill was introduced by Republican Senator Rob Kaufman from Franklin County, PA.
Last June, the bill passed the House unanimously. On Feb. 10, the Senate also unanimously passed the measure.
“Five years ago this exemption was inadvertently removed, effectively raising taxes on the men and women defending our freedom.” Parker said, “We worked hard to get this bill through the House and Senate since last spring and we are very pleased to see House Bill 561 signed by the Governor today.”
According to Parker’s office, the definition of earned income was changed “due to a mistake”, which was not caught at the time. Thus, for the past five years, military personnel were charged Earned Income Taxes if they lived or were based out of municipalities that have that tax in force.
(Parker’s legislative district includes Tobyhanna Army Depot and the East Stroudsburg National Guard Armory.)
“On behalf of the 20,000 members of the Pennsylvania National Guard who are represented by the Pennsylvania National Guard Associations (PNGAS) we are pleased Gov. Tom Wolf, the Senate and House have enacted House Bill 561 into law,” added Tim Gwinn, executive director of PNGAS. “The restoration of this 1965 local tax exemption continues the long tradition of Pennsylvanians honoring military service and provides a small token of thanks to them and their families.”
Beginning as a piece of legislation in the PA House February 23, 2015, it passed the that body on June 28, 2015 by a unanimous vote. It then went onto the PA Senate where it went from committee to the floor and passed by another unanimous vote on February 10, 2016. The House signed it that day and the Senate signed the bill on February 16. Then it was finally signed into law by Governor Wolfe on February 23.
The act of December 31, 1965 (P.L.1257, No.511), reads “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 employees 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 Local Tax Enabling Act was added to the law on July of 2008. It is this section that has been amended. The amended act states that excluded from these levies will be “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.”
The only other exclusions are for business losses and housing allowances paid to clergy.
Charles B Reynolds is an author, songwriter and freelance journalist. * Disclaimer – No monetary gain or other considerations were received from any entity, organization, or businesses mentioned in this article. He has been a journalist on Examiner covering politics, music and art since 2007.