PRINTER'S NO. 500
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 527
Session of
2025
INTRODUCED BY FARRY, PENNYCUICK, ROTHMAN, LAUGHLIN AND MARTIN,
MARCH 26, 2025
REFERRED TO FINANCE, MARCH 26, 2025
AN ACT
1 Amending the act of December 31, 1965 (P.L.1257, No.511),
2 entitled "An act empowering cities of the second class,
3 cities of the second class A, cities of the third class,
4 boroughs, towns, townships of the first class, townships of
5 the second class, school districts of the second class,
6 school districts of the third class and school districts of
7 the fourth class including independent school districts, to
8 levy, assess, collect or to provide for the levying,
9 assessment and collection of certain taxes subject to maximum
10 limitations for general revenue purposes; authorizing the
11 establishment of bureaus and the appointment and compensation
12 of officers, agencies and employes to assess and collect such
13 taxes; providing for joint collection of certain taxes,
14 prescribing certain definitions and other provisions for
15 taxes levied and assessed upon earned income, providing for
16 annual audits and for collection of delinquent taxes, and
17 permitting and requiring penalties to be imposed and
18 enforced, including penalties for disclosure of confidential
19 information, providing an appeal from the ordinance or
20 resolution levying such taxes to the court of quarter
21 sessions and to the Supreme Court and Superior Court,"
22 further providing for title of act; providing for local taxes
23 in cities of the first class, for prohibition of tax on
24 certain individuals and for reimbursement of taxes; and
25 making repeals.
26 The General Assembly of the Commonwealth of Pennsylvania
27 hereby enacts as follows:
28 Section 1. The title of the act of December 31, 1965
29 (P.L.1257, No.511), known as The Local Tax Enabling Act, is
 1 amended to read:
2 AN ACT
3 Empowering cities of the first class, second class, cities of
4 the second class A, cities of the third class, boroughs,
5 towns, townships of the first class, townships of the second
6 class, school districts of the second class, school districts
7 of the third class and school districts of the fourth class
8 including independent school districts, to levy, assess,
9 collect or to provide for the levying, assessment and
10 collection of certain taxes subject to maximum limitations
11 for general revenue purposes; authorizing the establishment
12 of bureaus and the appointment and compensation of officers,
13 agencies and employes to assess and collect such taxes;
14 providing for joint collection of certain taxes, prescribing
15 certain definitions and other provisions for taxes levied and
16 assessed upon earned income, providing for annual audits and
17 for collection of delinquent taxes, and permitting and
18 requiring penalties to be imposed and enforced, including
19 penalties for disclosure of confidential information,
20 providing an appeal from the ordinance or resolution levying
21 such taxes to the court of quarter sessions and to the
22 Supreme Court and Superior Court.
23 Section 2. The act is amended by adding a chapter to read:
24 CHAPTER 6
25 LOCAL TAXES IN CITIES OF THE FIRST CLASS
26 Section 601. Authority to levy taxes.
27 (a) Authorization.--
28 (1) The council of a city of the first class shall have
29 the authority, by ordinance, for general revenue purposes, to
30 levy, assess and collect taxes or provide for the levying,
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 1 assessment and collection of taxes on persons, transactions,
2 occupations, privileges, subjects and personal property
3 within the limits of a city of the first class, as it shall
4 determine, except that the council shall not have the
5 authority to levy, assess and collect a tax or provide for
6 the levying, assessment and collection of a tax on a
7 privilege, transaction, subject or occupation, or on personal
8 property, which is or may become subject to a State tax or
9 license fee.
10 (2) If, subsequent to the passage of an ordinance under
11 the authority of this chapter, the General Assembly enacts a
12 tax or license fee on a privilege, transaction, subject or
13 occupation, or on personal property taxed by a city of the
14 first class under this chapter, the act imposing the State
15 tax or license fee shall automatically vacate the city
16 ordinance passed under the authority of this chapter as to
17 all taxes accruing subsequent to the effective date of the
18 act imposing the State tax or license fee.
19 (3) It is the intention of this section to confer upon
20 cities of the first class the power to levy, assess and
21 collect taxes upon any and all subjects of taxation which the
22 Commonwealth has power to tax but which it does not now tax
23 or license, subject only to this section, that any tax upon a
24 subject which the Commonwealth may tax or license shall
25 automatically terminate upon the effective date of the State
26 act imposing the new tax or license fee.
27 (b) Prohibition of tax on salaries, wages, commissions or
28 other compensation on certain individuals.--
29 (1) A city of the first class may not impose a tax on
30 salaries, wages, commissions or other compensation on a
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 1 nonresident individual who is employed by an employer whose
2 place of business is located in a city of the first class and
3 performs all employment duties or services outside of the
4 city of the first class.
5 (2) If a nonresident individual performs a portion of
6 the individual's employment duties or services outside of the
7 city of the first class, the city of the first class may only
8 impose a tax on salaries, wages, commissions or other
9 compensation on that portion of salaries, wages, commissions
10 or other compensation attributable to duties performed by the
11 individual within the city of the first class.
12 (3) For purposes of this subsection, an employment duty
13 or service is deemed to be performed where the employee is
14 physically located, notwithstanding any electronic device,
15 computer network or other technology that connects the
16 employee to a person or premises located in a city of the
17 first class.
18 (c) Duties.--
19 (1) The State Treasurer or other appropriate State
20 official shall, at the time of payment of the salary, wage or
21 other compensation to an officer or employee of the
22 Commonwealth, with the exception of elected officials,
23 domiciled or rendering services within a city of the first
24 class, deduct any tax imposed by the city on the salary, wage
25 or other compensation paid by the Commonwealth to the officer
26 or employee.
27 (2) The State Treasurer or other appropriate State
28 official shall, on or before the last day of April, July,
29 October and January of each year, make a return on a form
30 furnished by or obtainable from the revenue commissioner of
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 1 the city and remit to the revenue commissioner the amount of
2 tax so deducted for the three-month period ending on the last
3 day of the month preceding.
4 Section 602. Creation of offices necessary for the collection
5 of taxes.
6 A city of the first class is authorized to provide, by
7 ordinance, for the creation of bureaus or the appointment and
8 compensation of officers, clerks, collectors and other
9 assistants and employees, either under existing departments or
10 otherwise, as may be deemed necessary for the assessment and
11 collection of taxes imposed under the authority of this chapter.
12 Section 603. Penalties and enforcement of nonpayment of taxes.
13 The council of a city of the first class shall have the power
14 to prescribe and enforce penalties for the nonpayment, within
15 the time fixed for their payment, of taxes imposed under the
16 authority of this chapter and for the violation of the
17 provisions of ordinances passed under the authority of this
18 chapter.
19 Section 604. Reimbursement.
20 (a) Applicability.--Notwithstanding any other provision of
21 law or this act, this section shall only apply to a taxpayer who
22 is a resident of this Commonwealth and not a resident of a city
23 of the first class but who is subject to the tax on salaries,
24 wages, commissions or other compensation imposed by a city of
25 the first class under this chapter.
26 (b) Employer duty.--Each employer of a taxpayer shall report
27 on or before the last day of April, July, October and January of
28 each year to a city of the first class all of the following:
29 (1) The amount of tax on salaries, wages, commissions or
30 other compensation under subsection (a) imposed by the school
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 1 district in which the taxpayer resides.
2 (2) The amount of tax on salaries, wages, commissions or
3 other compensation under subsection (a) imposed by the
4 municipality in which the taxpayer resides.
5 (c) School districts.--
6 (1) Notwithstanding any other provision of law or this
7 act, for tax years beginning after December 31, 2025, payment
8 of a tax on salaries, wages, commissions or other
9 compensation to a city of the first class shall be credited
10 by the school district of the taxpayer's residence at an
11 amount no greater than the tax on salaries, wages,
12 commissions or other compensation imposed by the school
13 district in which the taxpayer resides.
14 (2) In order to facilitate the prompt implementation of
15 this section, the Department of Education shall, in
16 consultation with the Department of Community and Economic
17 Development, promulgate temporary regulations to calculate
18 the amount equal to the aggregate amount of the tax credited
19 under paragraph (1) which is due to each school district
20 qualifying under this subsection. The temporary regulations
21 shall expire no later than two years following the
22 publication of the temporary regulations. The temporary
23 regulations shall not be subject to:
24 (i) Section 612 of the act of April 9, 1929
25 (P.L.177, No.175), known as The Administrative Code of
26 1929.
27 (ii) Sections 201, 202, 203, 204 and 205 of the act
28 of July 31, 1968 (P.L.769, No.240), referred to as the
29 Commonwealth Documents Law.
30 (iii) Sections 204(b) and 301(10) of the act of
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 1 October 15, 1980 (P.L.950, No.164), known as the
2 Commonwealth Attorneys Act.
3 (iv) The act of June 25, 1982 (P.L.633, No.181),
4 known as the Regulatory Review Act.
5 (3) The Department of Education shall certify the amount
6 calculated pursuant to the regulations under paragraph (2) to
7 the city of the first class. The amount certified shall,
8 within 30 days of receipt of the certification, be paid by
9 the city of the first class to the school district of
10 residence of each taxpayer.
11 (d) Municipalities.--
12 (1) Notwithstanding any other provision of law or this
13 act, for tax years beginning after December 31, 2025, payment
14 of a tax on salaries, wages, commissions or other
15 compensation to a city of the first class shall be credited
16 by the municipality of the taxpayer's residence at an amount
17 no greater than the tax on salaries, wages, commissions or
18 other compensation imposed by the municipality in which the
19 taxpayer resides.
20 (2) In order to facilitate the prompt implementation of
21 this section, the Department of Community and Economic
22 Development shall, in consultation with the Department of
23 Education, promulgate temporary regulations to calculate the
24 amount equal to the aggregate amount of the tax credited
25 under paragraph (1) which is due to each municipality
26 qualifying under this subsection. The temporary regulations
27 shall expire no later than two years following the
28 publication of the temporary regulations. The temporary
29 regulations shall not be subject to:
30 (i) Section 612 of The Administrative Code of 1929.
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 1 (ii) Sections 201, 202, 203, 204 and 205 of the
2 Commonwealth Documents Law.
3 (iii) Sections 204(b) and 301(10) of the
4 Commonwealth Attorneys Act.
5 (iv) The Regulatory Review Act.
6 (3) The Department of Community and Economic Development
7 shall certify the amount calculated pursuant to the
8 regulations under paragraph (2) to the city of the first
9 class. The amount certified shall, within 30 days of receipt
10 of the certification, be paid by the city of the first class
11 to the municipality of residence of each taxpayer.
12 Section 3. Repeals are as follows:
13 (1) The General Assembly declares that the repeal under
14 paragraph (2) is necessary to effectuate the addition of
15 Chapter 6 of the act.
16 (2) The act of August 5, 1932 (Sp.Sess., P.L.45, No.45),
17 referred to as the Sterling Act, is repealed.
18 (3) The General Assembly declares that the repeal under
19 paragraph (4) is necessary to effectuate the addition of
20 Chapter 6 of the act.
21 (4) Section 324 of the act of June 27, 2006 (1st
22 Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act,
23 is repealed.
24 Section 4. The addition of Chapter 6 of the act is a
25 continuation of the act of August 5, 1932 (Sp.Sess., P.L.45,
26 No.45), referred to as the Sterling Act. The following apply:
27 (1) Except as otherwise provided in Chapter 6 of the
28 act, all activities initiated under the Sterling Act shall
29 continue and remain in full force and effect and may be
30 completed under Chapter 6 of the act. Orders, regulations,
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 1 rules and decisions which were made under the Sterling Act
2 and which are in effect on the effective date of section 3(2)
3 of this act shall remain in full force and effect until
4 revoked, vacated or modified under Chapter 6 of the act.
5 Contracts, obligations and collective bargaining agreements
6 entered into under the Sterling Act are not affected nor
7 impaired by the repeal of the Sterling Act.
8 (2) Except as provided in paragraph (3), any difference
9 in language between Chapter 6 of the act and the Sterling Act
10 is intended only to conform to the style of the act and is
11 not intended to change or affect the legislative intent,
12 judicial construction or administration and implementation of
13 the Sterling Act.
14 (3) Paragraph (2) does not apply to the addition of
15 section 601(b) or 604 of the act.
16 Section 5. A reference in statute or regulation to the act
17 of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the
18 Sterling Act, shall be deemed a reference to Chapter 6 of the
19 act.
20 Section 6. This act shall take effect as follows:
21 (1) This section shall take effect immediately.
22 (2) The remainder of this act shall take effect in 180
23 days or January 1, 2026, whichever is later.
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Statutes/Laws affected:
Printer's No. 0500: P.L.1257, No.511, P.L.769, No.240