1Amending the act of December 31, 1965 (P.L.1257, No.511),
2entitled "An act empowering cities of the second class,
3cities of the second class A, cities of the third class,
4boroughs, towns, townships of the first class, townships of
5the second class, school districts of the second class,
6school districts of the third class and school districts of
7the fourth class including independent school districts, to
8levy, assess, collect or to provide for the levying,
9assessment and collection of certain taxes subject to maximum
10limitations for general revenue purposes; authorizing the
11establishment of bureaus and the appointment and compensation
12of officers, agencies and employes to assess and collect such
13taxes; providing for joint collection of certain taxes,
14prescribing certain definitions and other provisions for
15taxes levied and assessed upon earned income, providing for
16annual audits and for collection of delinquent taxes, and
17permitting and requiring penalties to be imposed and
18enforced, including penalties for disclosure of confidential
19information, providing an appeal from the ordinance or
20resolution levying such taxes to the court of quarter
21sessions and to the Supreme Court and Superior Court," in
22consolidated collection of local income taxes, further
23providing for definitions.

24The General Assembly of the Commonwealth of Pennsylvania
25hereby enacts as follows:

26Section 1. The definition of "earned income" in section 501
27of the act of December 31, 1965 (P.L.1257, No.511), known as The

1Local Tax Enabling Act, added July 2, 2008 (P.L.197, No.32), is
2amended to read:

3Section 501. Definitions.

4The following words and phrases when used in this chapter
5shall have the meanings given to them in this section unless the
6context clearly indicates otherwise:

7* * *

8"Earned income." The compensation as required to be reported 
9to or as determined by the Department of Revenue under section 
10303 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax 
11Reform Code of 1971, and rules and regulations promulgated under 
12that section[.] subject to the following:

13(1) Employee business expenses as reported to or
14determined by the Department of Revenue under Article III of
15the Tax Reform Code of 1971 shall constitute allowable
16deductions in determining earned income.

17(2) The term does not include [offsets]:

18(i) Wages or compensation paid to individuals on
19active military service, regardless of whether it is
20earned for active military service inside or outside this

22(ii) Offsets for business losses.

23(iii)  The amount of any housing allowance provided
24to a member of the clergy [shall not be taxable as earned

26* * *

27Section 2. This act shall apply to income taxes levied and
28collected after December 31, 2013.

29Section 3. This act shall take effect in 60 days.