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

1of the act of December 31, 1965 (P.L.1257, No.511), known as The
2Local Tax Enabling Act, added July 2, 2008 (P.L.197, No.32), is
3amended to read:

4Section 501. Definitions.

5The following words and phrases when used in this chapter
6shall have the meanings given to them in this section unless the
7context clearly indicates otherwise:

8* * *

9"Earned income." The compensation as required to be reported 
10to or as determined by the Department of Revenue under section 
11303 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax 
12Reform Code of 1971, and rules and regulations promulgated under 
13that section[.] subject to the following:

14(1) Employee business expenses as reported to or
15determined by the Department of Revenue under Article III of
16the Tax Reform Code of 1971 shall constitute allowable
17deductions in determining earned income.

18(2) The term does not include [offsets]:

19(i) Wages or compensation paid to individuals on
20active military service, regardless of whether it is
21earned for active military service inside or outside this
22Commonwealth.

23(ii) Offsets for business losses.

24(iii)  The amount of any housing allowance provided
25to a member of the clergy [shall not be taxable as earned
26income].

27* * *

28Section 2. This act shall apply to income taxes levied and
29collected after December 31, <-2013 2014.

30Section 3. This act shall take effect in 60 days.