Pennsylvania HB 1514: 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, providing for tax paid on tipped wages.

Bill Text

PRINTER'S NO. 1770
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1514
Session of
2025
INTRODUCED BY HOGAN, WARNER, MARCELL, KAUFFMAN, COOK, DAVANZO,
COOPER, ROAE, LEADBETER, STAATS, ARMANINI, KUTZ, ROWE, DAY,
KOZAK, KRUPA, T. JONES AND SMITH, MAY 28, 2025
REFERRED TO COMMITTEE ON FINANCE, MAY 29, 2025
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in personal income tax, providing for tax paid on
tipped wages.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding a section to
read:
Section 314.1. Tax Paid on Tipped Wages.--(a) A taxpayer
shall be entitled to a tax credit against the tax otherwise due
under this article equal to the amount of income which is in the
form of tipped wages multiplied by the tax rate under section
302.
(b) A taxpayer shall calculate the amount of taxes paid on
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any tipped wages using the information furnished by the employer
pursuant to 34 Pa. Code § 231.36 (relating to statement to
employee).
(c) The tax credit shall be equal to one hundred per cent of
any taxes paid pursuant to this article on tipped wages. If a
taxpayer has received any tax forgiveness under section 304,
that amount shall be deducted from the total amount of the tax
credit.
(d) The tax credit shall be fully refundable.
(e) The tax credit may not exceed the proportion of the tax
otherwise due under this article.
(f) The Department of Revenue shall incorporate the filing
of the tax credit into the standard PA 40 form.
(g) A taxpayer applying for a tax credit shall provide the
department with a copy of the taxpayer's paperwork under 34 Pa.
Code § 231.36 as proof of credit amount.
(h) As used in this section:
"Tax credit" means the tax credit authorized under this
section.
"Tipped wages" means a form of compensation, taxable under
this article, where the payment is voluntary and made by a
customer to an employe and is not set by the employer or subject
to negotiation.
Section 2. This act shall apply to taxable years beginning
after December 31, 2025.
Section 3. This act shall take effect immediately.
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