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Falls Township Proposes Earned Income Tax: What’s the Impact on #NewtownPA?

Falls Township Proposes Earned Income Tax: What’s the Impact on #NewtownPA? | Newtown News of Interest |

Falls Township wants to recoup some of the roughly $3.5 million that its residents are paying to other municipalities in the form of an earned income tax as officials are considering enacting an EIT of their own. Falls is among the few remaining municipalities in Bucks County that haven't enacted an EIT. The Pennsbury School District also doesn't charge the tax.


The tax would help the township fund the $73,240,677 budget the township is proposing for next year, which includes an increase in the fire protection fund tax, the first tax increase in the township in 30 years.


Under state law, a municipality and its school district can split a 1% earned income tax charged to residents [which is what Newtown Township does]. If the school district doesn't charge the tax, the municipality keeps the 1%. But if it also doesn't charge an earned income tax, residents who work in another municipality in Pennsylvania that charges the tax must pay it there, with the exception of Philadelphia that gets to keep the wage tax it charges.


johnmacknewtown's insight:


How much of this “Non-resident” EIT from Falls residents is collected by NT? The “actual’ non-resident EIT collected by NT in 2021 – according to the revised draft 2023 budget – was $2,262,158 (the 2021 audit has a different number: $2,110,242).


How much of this “Non-resident” EIT comes from from Falls residents working in NT?


According to KEYSTONE collections group, which collects NT EIT, the figure "would be $170,268.38." This equates to about 0.5 mill of RE tax should the township need to find other sources of income to offset this loss.


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Newtown News of Interest
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