This bill amends the Tax Reform Code of 1971, specifically focusing on the definitions related to personal income tax. It updates the definition of "compensation" to include various forms of remuneration for services rendered, such as salaries, wages, bonuses, and incentive payments. Notably, the bill expands the exclusions from the definition of "compensation" to include specific social safety net benefits, such as the Supplemental Nutrition Assistance Program, the Women, Infants, and Children program, the Temporary Assistance for Needy Families program, and the Children's Health Insurance Program. Additionally, it includes other forms of assistance like Pell Grants, Head Start, and Medicaid waiver payments, as well as unemployment compensation payments.

The bill clarifies that these social safety net benefits and other specified payments are not considered "compensation" for tax purposes, thereby potentially affecting the taxable income of individuals receiving such benefits. The changes aim to provide clearer guidelines on what constitutes taxable compensation under Pennsylvania law, ensuring that certain forms of assistance are not taxed as income. 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