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 such as salaries, wages, commissions, and bonuses, while also specifying that it encompasses distributions under certain plans related to elective deferrals of income. The bill clarifies what does not constitute "compensation," which includes periodic payments for sickness and disability, retirement benefits, public assistance payments, and reimbursements for actual expenses, among others.

Notably, the bill introduces new language that explicitly excludes certain public assistance programs from the definition of "compensation." These programs 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, and various social safety net benefits such as Pell Grants and Medicaid waiver payments. This amendment aims to provide clearer guidelines on what is considered taxable income under Pennsylvania's personal income tax laws. 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