Pennsylvania SB 962: An Act amending Titles 53 (Municipalities Generally) and 72 (Taxation and Fiscal Affairs) of the Pennsylvania Consolidated Statutes, eliminating school district property taxes; imposing county and school district taxes; establishing the School District Emergency Fund and the School District Property Tax Elimination Fund; consolidating Articles II and III of the Tax Reform Code of 1971; in preliminary provisions relating to sales and use tax, providing for definitions; in taxation generally relating to sales and use tax, providing for exclusions and for transfer to county sales and use tax accounts; in preliminary provisions relating to personal income tax, providing for definitions; and making repeals.

Bill Text

PRINTER'S NO. 1100
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 962
Session of
2025
INTRODUCED BY KEEFER, JULY 31, 2025
REFERRED TO FINANCE, JULY 31, 2025
AN ACT
Amending Titles 53 (Municipalities Generally) and 72 (Taxation
and Fiscal Affairs) of the Pennsylvania Consolidated
Statutes, eliminating school district property taxes;
imposing county and school district taxes; establishing the
School District Emergency Fund and the School District
Property Tax Elimination Fund; consolidating Articles II and
III of the Tax Reform Code of 1971; in preliminary provisions
relating to sales and use tax, providing for definitions; in
taxation generally relating to sales and use tax, providing
for exclusions and for transfer to county sales and use tax
accounts; in preliminary provisions relating to personal
income tax, providing for definitions; and making repeals.
This act may be referred to as the School Property Tax
Elimination Act.
The General Assembly finds and declares as follows:
(1) School district property taxes are a fixed expense
for property owners, which creates an unsustainable and
regressive system of taxation impacting our fundamental
rights of life, liberty and property. School district
property taxes are not reflective of a property owner's
ability to pay and are regressive in nature.
(2) The current rate of increase of school district
property taxes is unsustainable due to factors frequently
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beyond the control of local school officials and school
boards, including underfunded pensions, rapidly escalating
health care costs, more complex educational requirements for
students and unfunded mandates.
(3) School district property taxes impact individuals
differently. For example, if spouses are retired and one
spouse passes away, the income reduction caused by the death
is immediate, but the school district property tax burden
remains unchanged. Other factors impacting older
Pennsylvanians' ability to bear the burden of school district
property taxes include the amount of financial assets in
retirement, health, mobility and the proximity of family
members. School district property taxes are problematic for
working families as well, with young working families bearing
the brunt of funding the State while managing such financial
burdens as income taxes, exploding health care coverage costs
and day care expenses.
(4) This Commonwealth faces an additional risk through
its tax structure and limited job creation, as young working
families continue to relocate from this Commonwealth, partly
as a result of Pennsylvania's tax system being specifically
geared to taxation of income from working citizens, with
retirement income not being taxed.
(5) The Independent Fiscal Office reports that
Pennsylvania is attracting more seniors as residents because
of the tax status in this Commonwealth of retirement income,
particularly when compared to neighboring states.
(6) The demographic changes to this Commonwealth, fueled
by the combination of the exodus of younger people from this
Commonwealth and the migration of older people into this
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Commonwealth, have precipitated a growing financial crisis.
(7) School districts are fixed cost-intensive operations
and seek stability in funding through property taxes, but the
predictability and certainty of school district property
taxes create contradictory impacts on property owners in
meeting their tax obligations.
(8) School district property tax reform must be
accomplished in an equitable manner in the form of the total
elimination of school district property taxes for residential
and commercial properties. Businesses in this Commonwealth
alone cannot and should not bear the financial burden caused
by the elimination of school district property taxes on
residential property only. (See 53 Pa.C.S. § 9011(a).)
(9) School district property tax reform must also
include rental properties, whereby each landlord must reduce
rental payments required of each residential or commercial
tenant in an amount equal to the reduction of taxes on real
property attributable to a tenant's unit. (See 53 Pa.C.S. §
9017.)
(10) This act provides for the elimination of school
district property taxes through the following:
(i) An increase in the sales, use and occupancy
taxes, whereby a new or additional 2% tax shall be
imposed on certain items and that money distributed to
each county of this Commonwealth, which shall disburse
money to school districts within the county from the
School District Property Tax Elimination Fund. (See 53
Pa.C.S. Ch. 90A Subchs. C and F.) For this purpose,
certain exclusions from taxation are eliminated,
including certain clothing, candy and gum. (See 53
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Pa.C.S. § 90A22(b.1).)
(ii) The imposition by each