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CCATO News and Events

Posted on: May 9, 2023

CCATO Endorses SB 671


EDITORS: For more information:   Ernie Holling, Executive Director CCATO, 610-827-2241 or Kieran Francke, Communications Director CCATO, 484-667-6292

CCATO Endorses Earned Income Tax Bill HB 671


Chester County municipalities and school districts under SB671 will be enabled to receive Earned Income Tax (EIT) revenues denied since the 1932 passage of the Sterling Act.  The four collar counties (Chester, Bucks, Delaware, and Montgomery) are estimated to gain $56M annually. The 1932 act treated the cities of the First Class, only Philadelphia, differently from all other local governments in the state.   Philadelphia was allowed to tax the income of non-resident workers in the city to aid the city during the Depression.   This essentially denied EIT income to the home township of the people working in the city.

While most municipalities’ EIT tax rate is between 0.0% and 1.25%, Philadelphia currently taxes non-residents at 3.44 and residents at 3.79%.

“Municipalities presently face needs to fund emergency services like fire and emergency medical service as well as category known as ‘unfunded mandates’ and urgently need their fair share” according to Steve Allaband, President of the Chester County Association of Township Officials (CCATO).

Bucks County Senator Frank Farry introduced Senate Bill 671 on April 28th as a full draft.  It moved to the Senate Finance Committee on May 5th where it was approved and then was read before the Senate the required three times and by vote passed to the House Chamber.  By all standards it was a very rapid process. The bill removes the ability to tax people working for a Philadelphia-based facility who work outside the city like from home.  The bill also requires Philadelphia to remit the local municipal and school EIT to those entities from the City’s collection.  The bill repeals portions of the Sterling Act and modifies The Local Tax Enabling Act to remove the non-resident taxing capability.

Representative Munroe from Bucks County has published a memorandum seeking co-sponsors.  A draft bill has not been published as of this writing.  The House is on recess until May 22nd and CCATO will be reaching members of the House and following up with Senators to keep our municipalities current.


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