HARRISBURG – A bill sponsored by Sen. Lisa Baker (R-20) that will reinstate the local tax exemption for active-duty military pay has passed the Senate by a unanimous vote on June 9.
Baker, who serves on the Senate Veterans Affairs and Emergency Preparedness Committee, said Senate Bill 803 would correct an unintended oversight in the Local Tax Enabling Act signed into law in 2008 as Act 32.
That law removed a well-established tax exemption for active-duty military pay earned within the Commonwealth, beginning in 2012.
“While the changes streamlined our local tax system, they also had the unfortunate consequence of removing this important tax benefit for our military,” Baker said.
“It has been long-standing policy that the wages they earn for active-duty service should not be subject to local tax.”
Many Guard members were not aware of the new rules, and are now facing not only a higher tax burden, but penalties and interest.
“This bill insures our continued commitment to do all we can for these brave men and women,” Baker said.
”Our National Guard is one of the most frequently deployed in the nation. To get a local tax bill while they are away serving our country fails to acknowledge their sacrifices and service.”
The bill, which now heads to the House for consideration, does not exempt from taxation those wages earned during training exercises and other inactive duty.