| Impact on Individual Taxpayers |
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Who will pay more and who will pay less under Act 24 depends upon (1) how much their school district will have to increase the earned income tax rate; (2) the taxpayer’s earned income; and (3) how much the taxpayer currently pays in occupation tax. To get a rough estimate of how Act 24
might affect taxpayers in your school district, find your school
district’s potential earned income tax rate increase, either directly
from the ballot wording (if an Act 24 vote is being held in your district)
or from your school district. If
neither is available, use Table 3 as an approximation. The
potential earned income tax increases listed in Table 3 are based upon
1998–1999 fiscal data, which was the most recent statewide data
available at the time this publication was written, and which should be
viewed as approximations of how earned income tax rates might change. If
your district has raised the occupation tax rate since 1999, the estimate
in Table 3 will be low. If
your district is not listed, it did not use the occupation tax in
1998–99 and will be ineligible to use Act 24
unless it has newly imposed the occupation tax since 1999. In Figure 1 below, find the line that is closest to the potential earned income tax rate increase for your school district. This line is the “break point” for which taxpayers will end up paying more and which will pay less if Act 24 provisions are adopted in their school district. To see how specific taxpayers will fare, find the intersection of the taxpayer’s earned income and the amount they currently pay in occupation tax (see the example in Figure 2 below). If this point is above the line for the percentage increase in their school district’s earned income tax, they should pay less under Act 24. If the point is below the line, they should pay more under Act 24.
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| Figure 2: Example taxpayer with
$30,000 in earned income and paying $400 in occupation tax.
A taxpayer with $30,000 in earned income who pays $400 a year in occupation tax, for example, will pay less in local tax if their district raises their earned income tax rate by 1.0 percent. Find their income ($30,000) on the horizontal axis, and the amount they pay in occupation tax ($400) on the vertical axis.
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Go To: Impacts of Act 24
If you have questions about Pennsylvania local taxes and local tax reform, contact Tim Kelsey or your local Penn State Cooperative Extension office. Webpage and content developed by Tim Kelsey, Associate Professor of Agricultural Economics, Department of Agricultural Economics and Rural Sociology, Penn State University
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