1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," in personal income tax, further providing for
11classes of income.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1.  Section 303(a)(2) of the act of March 4, 1971 
15(P.L.6, No.2), known as the Tax Reform Code of 1971, added
16August 31, 1971 (P.L.362, No.93), is amended to read:

17Section 303.  Classes of Income.--(a)  The classes of income
18referred to above are as follows:

19* * *

20(2)  Net profits. The net income from the operation of a
21business, profession, or other activity, after provision for all
22costs and expenses incurred in the conduct thereof, determined

1either on a cash or accrual basis in accordance with accepted
2accounting principles and practices but without deduction of
3taxes based on income. A self-employed taxpayer may exclude one-
4half of self-employment taxes to the extent allowable under 
5section 164(f) of the Internal Revenue Code of 1986 (Public Law 
699-514, 26 U.S.C. § 164(f)).

7* * *

8Section 2.  The amendment of section 303(a)(2) of the act
9shall apply to taxable years beginning after December 31, 2012.

10Section 3.  This act shall take effect immediately.