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House of Representatives
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted:	June 18, 2015 03:55 PM
From:	Representative David Parker and Rep. Jack Rader, Jr.
To:	All House members
Subject:	REINSTATEMENT OF EARNED INCOME TAX EXEMPTION FOR ACTIVE DUTY MILITARY

In the near future, we plan to introduce legislation that would reinstate an earned income tax exemption for active duty military that serve inside the Commonwealth. Act 32 of 2008 was enacted with the intent of streamlining the manner in which the earned income tax (EIT) is collected at the local level. However, when Act 32 was enacted, the definition of earned income was modified in order to mirror language that currently exists within the Tax Reform Code. As a result of this change, the scope of the EIT was increased to include active duty military pay that is earned within the boundaries of the Commonwealth. Prior to Act 32 becoming law, active duty military pay was exempt from the EIT, regardless of where it was earned. In the near future I will be introducing legislation which will amend the Local Tax Enabling Act by exempting all active duty military pay, regardless of where it was earned, from the EIT. In short, Pennsylvania honored its military members by exempting active duty pay from local income taxes from 1965 to 2012. Pennsylvania's Soldiers, Airmen, Sailors, and Marines are serving around the world and here within the Commonwealth. Less than one percent of our population serves in the military and restoring this tax exemption for active duty pay within the Commonwealth simply makes sense. Further, many local tax authorities have not changed their tax collection process in order to collect this tax. It is cost prohibitive given the nominal amount of revenue being collected from the service members of the Commonwealth. With the potential for BRAC Commission implications in the near future, now is not the time to discourage active duty military personnel from serving in Pennsylvania. We would like to encourage all of you to join us as a cosponsor of this important legislation, which will restore the EIT exemption relating to active duty military pay.

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