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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session


Posted: March 6, 2013 01:33 PM
From: Senator Lisa Baker
To: All Senate members
Subject: Local Earned Income Tax Exemption for Active-Duty Military Pay

Please join me in co-sponsoring legislation to ensure that all active-duty military pay remains exempt from local income tax.

Under the terms of the Local Tax Enabling Act signed into law under Act 32 of 2008, all active duty military pay earned within the Commonwealth became subject to local income taxes beginning in 2012. The National Guard Association is now reporting an outcry from members of the military as they discover this change.

The prior definition of “earned income” in the Local Tax Enabling Act excludes wages paid to all individuals on active military service, but the new definition for earned income under Act 32 reverts to language used in the Tax Reform Code of 1971. This language only excludes active duty pay received outside Pennsylvania.

Act 32 provided many beneficial changes in our local tax system, but I believe its effect on active duty military pay should be reconsidered. The military operations of the PA National Guard have increased exponentially in the past few years while more and more Guard personnel have been ordered to serve active duty either abroad or at state installations in support of major deployments. These soldiers are required to take leave from their families and professional careers – often at lower pay – to serve our country, and I believe the wages they earn for this service should not become subject to new taxation.

The legislation I plan to reintroduce will amend the definition of “earned income” in the Local Tax Enabling Act to explicitly exempt wages paid to individuals on active duty military service, regardless of whether it is earned inside or outside the Commonwealth. This bill was Senate Bill 382 of last session, which was reported from the Senate Finance Committee but failed to reach the Governor’s desk.

Thank you.

Introduced as SB803