This bill amends the Tax Reform Code of 1971 by updating the definition of "compensation" within the context of personal income tax. The revised definition now explicitly includes various forms of remuneration such as salaries, wages, commissions, bonuses, and incentive payments, as well as distributions under specific plans related to elective deferrals of income. Additionally, the bill clarifies what does not constitute "compensation," which includes periodic payments for sickness and disability, workmen's compensation payments, retirement benefits, public assistance payments, and certain reimbursements and benefits provided by employers or labor unions.

Notably, the bill introduces new language that specifies certain public assistance programs and social safety net benefits that are excluded from the definition of "compensation." These include the Supplemental Nutrition Assistance Program, the Women, Infants, and Children program, the Temporary Assistance for Needy Families program, the Children's Health Insurance Program, Pell Grants, Head Start, and Medicaid waiver payments. The act is set to take effect 60 days after its passage.

Statutes/Laws affected:
Printer's No. 2161 (Jul 23, 2025): P.L.6, No.2