In personal income tax, further providing for classes of income.
Summary
HB1467 amends Pennsylvania’s Tax Reform Code to change the definition of “compensation” for personal income tax purposes. Specifically, it removes “tips” from the list of items included in compensation, while leaving salaries, wages, commissions, bonuses, incentive payments, fees, and similar remuneration in place. The bill also states that tips and gratuities shall not be considered compensation under the article.
As drafted, the bill would exclude tips and gratuities from Pennsylvania taxable compensation, which would affect how personal income tax is calculated for workers who receive tip income and how employers or payors report that income. The measure would amend Section 303(a)(1)(i) of the Tax Reform Code of 1971 and would take effect 60 days after enactment.
Impact
The bill would narrow the state personal income tax base by removing tips and gratuities from the statutory definition of compensation. This would change the treatment of tipped income under Section 303 of the Tax Reform Code of 1971 and could reduce taxable income for affected workers, while also altering reporting and withholding practices for employers and payroll systems that handle tip income.
Sentiment
No committee transcript or vote record was provided, so there is no direct evidence of debate, support, or opposition in the available materials. Based on the text alone, the bill appears to be a targeted tax policy change focused on tipped workers, with a neutral drafting tone and no stated findings or fiscal rationale in the bill itself.
Contention
The main policy issue is whether tips should remain part of taxable compensation or be excluded from state personal income tax. Supporters would likely frame the bill as tax relief for tipped workers, while opponents could raise concerns about reduced tax revenue, administrative complexity, or preferential treatment for one category of income. Because no discussion transcript or vote history is available, specific legislators or stakeholder groups cannot be identified from the record provided.