An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, further providing for classes of income.
Summary
HB218 would amend Pennsylvania’s Tax Reform Code to allow taxpayers to deduct amounts paid for mortgage insurance from taxable income on their annual personal income tax return. The bill defines mortgage insurance broadly to include mortgage guaranty insurance and similar coverage protecting against nonpayment or default on a residential mortgage transaction. The deduction could not reduce taxable income below zero.
The deduction would apply beginning with taxable years after December 31, 2025, and the act would take effect immediately upon enactment. In practical terms, the bill would create a new personal income tax adjustment for homeowners who pay private mortgage insurance or comparable premiums, potentially lowering state taxable income for eligible filers.
Impact
HB218 would add a new subsection to Section 303 of the Tax Reform Code of 1971, expanding the list of deductible items for Pennsylvania personal income tax purposes. It would affect individual taxpayers who pay mortgage insurance premiums on residential mortgages, while leaving the broader tax structure unchanged. The measure could reduce state income tax liability for some homeowners and would require the Department of Revenue to administer the new deduction starting with tax years after 2025.
Sentiment
Based on the available record, the bill appears to have a straightforward, policy-focused purpose with no recorded committee debate or votes to indicate opposition or support. The absence of transcripts and voting history suggests there is no documented public controversy in the materials provided. The bill’s framing as a tax relief measure for homeowners implies a generally favorable intent toward taxpayers who incur mortgage insurance costs.
Contention
The main policy question raised by HB218 is whether mortgage insurance premiums should receive special tax treatment as a deductible expense under Pennsylvania personal income tax law. Potential points of contention would likely involve the revenue impact on the Commonwealth, the fairness of extending a deduction to a subset of homeowners, and whether the benefit should be limited to certain mortgage products or income levels. However, no specific objections or competing viewpoints are documented in the provided committee materials or vote history.