Pa. bill would exempt military from local income taxes

The measure would cut revenue to Pennsylvania’s local governments and public schools by about $1.7 million, combined.

A measure awaiting Gov. Tom Wolf’s signature would exempt military personnel from local earned income taxes on pay for active duty service.

The change would essentially re-instate an exemption in place from 1965 through 2011. After that, amendments to state law narrowed the exemption to include only pay earned for service outside Pennsylvania and within the state in emergency situations, according to the bill memo.

Some say the scaled-back exemption was an unintended consequence of the amendments, the bill memo notes.

Effective for 2016 earnings, the exemption would reduce earned income tax revenue to municipalities and public school districts by between $1.6 million and $1.8 million, according to the legislative fiscal note.

Local earned income tax rates range between .3 percent and 3.9 percent, according to data from the Department of Community & Economic Development.

Rep. Rob Kauffman, R-Franklin, sponsored the measure.

It passed both houses unanimously and was presented to Wolf Wednesday.